India had raised strong concerns after sudden fertilizer curbs disrupted the supply of Di-Ammonium Phosphate (DAP) ahead of the Rabi season (winter cropping).
US-imposed tariffs may be driving two Asian powerhouses closer as India and China prepare to launch a new chapter in trade relations. A crucial step forward in trade ties came on August 19, when China removed export curbs on fertilizers, rare earth magnets, minerals, and tunnel boring machines.
This comes ahead of Prime Minister Narendra Modi’s first visit to China in seven years for the Shanghai Cooperation Organisation (SCO) summit, where he is expected to hold bilateral meetings with Chinese President Xi Jinping and Russian President Vladimir Putin.
Export Ban Lifted
According to reports, External Affairs Minister S. Jaishankar had asked his Chinese counterpart Wang Yi to remove curbs on the abovementioned items during their meetings last month.
Yi has reportedly assured Jaishankar that Beijing has already started acting on these requests, with initial shipments reportedly on their way, as per an article by the Economic Times. Yi is currently on a two-day visit to India.
India had raised strong concerns after sudden fertilizer curbs disrupted the supply of Di-Ammonium Phosphate (DAP) ahead of the Rabi season (winter cropping). Similarly, restrictions on tunnel boring machines had stalled key infrastructure projects, including metro and highway works. Meanwhile, auto and electronics firms had warned of severe disruptions due to shortages of rare earth magnets.
India imports nearly 90% of its rare earth magnets from China. On April 4, China announced export controls on a broad range of rare earths and related magnets as a response to US President Donald Trump’s broader tariffs on goods. The decision disrupted global supply chains vital to automakers, aerospace firms, semiconductor makers, and military contractors.
Officials indicated that these restrictions were initially linked to security considerations amid strained bilateral ties.
However, last month’s discussions on troop disengagement along the Line of Actual Control have boosted confidence in a gradual revival of economic engagement. The latest development eases pressure on farmers, automakers, and infrastructure developers.
According to India’s Ministry of Commerce and Industry, the country exported goods worth ₹14.25 billion to China in FY24-25, while its imports of Chinese goods stood at ₹113.46 billion.
US Tariff Challenges
The bilateral tie gains importance in light of the 50% tariff Trump has imposed on Indian exports, citing its ties with Russia in aiding the Ukraine-Russian war, while granting China a temporary 90-day tariff reprieve. New Delhi noted the contrast in US policy, with Washington simultaneously adopting a softer line toward Beijing, extending a trade truce, and even easing chip export restrictions.
Analyst Take
For India, the easing of curbs carries significant economic implications. Fertilizer imports are vital for the farm sector, where rising input costs often feed into broader inflation, said SEBI-registered Front Wave Research.
Rare earth magnets and minerals, meanwhile, are essential for the auto and electric vehicle (EV) industries, which are gearing up for higher production ahead of the festive season, they added. Clearer access to these raw materials is likely to support India’s EV ambitions and keep supply chains steady.
On the infrastructure front, tunnel boring machines are crucial for large-scale projects such as metro rail expansions and highways. Their availability is expected to reduce delays and cost overruns.
Wang Yi is also scheduled to meet National Security Advisor Ajit Doval and call on Prime Minister Narendra Modi later today.
For markets, the breakthrough aligns neatly with India’s domestic growth drivers—autos, agriculture, and infrastructure. The technical dashboard continues to flash strength in Autos, adding conviction to the festive season rally setup, they said.
Stocks Watch
Agriculture stocks, including Chambal Fertilizers and Chemicals (+2.8%), Paradeep Phosphates (+3.3%), Rashtriya Chemicals and Fertilizers (+3.1%), and Madras Fertilizers (+2%) were trading higher on Tuesday.
Auto stocks extended Monday’s gains on GST relief. The Nifty Auto index was up 1.22%, led by gains in Motherson Sumi (+7.5%), Tube Investments of India (+3.7%), and Tata Motors (+3.2%)
For updates and corrections, email newsroom[at]stocktwits[dot]com.<