Diplomatic breakthrough as Beijing promises to address New Delhi's concerns over fertilizers, rare earths, and tunnel boring machines
19 Aug 2025 | 4760 Views | By Autocar Professional Bureau
In a significant diplomatic development, China has agreed to address India's pressing concerns regarding export restrictions on three critical items - fertilizers, rare earth minerals, and tunnel boring machines, according to a report by The Economic Times.
The breakthrough came during Chinese Foreign Minister Wang Yi's two-day visit ...
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In a significant diplomatic development, China has agreed to address India's pressing concerns regarding export restrictions on three critical items - fertilizers, rare earth minerals, and tunnel boring machines, according to a report by The Economic Times.
The breakthrough came during Chinese Foreign Minister Wang Yi's two-day visit to India, where he held crucial talks with External Affairs Minister S. Jaishankar, the newspaper said.
According to sources familiar with the discussions, as reported by the Economic Times (ET), Beijing has not only committed to easing fertilizer export restrictions but has also conveyed its readiness to allow shipments of rare earth magnets, minerals, and tunnel boring machines to India. These were the three key requests that New Delhi had consistently flagged in bilateral talks, ET sources revealed.
The Background
China had imposed unofficial trade restrictions on these critical items over the past several months, creating significant challenges for India's industrial and agricultural sectors.
The Economic Times had earlier reported that China stopped shipments of specialty fertilizers to India for over two months, adding to a growing list of trade restrictions that also affected rare-earth magnets and tunnel boring machines.
The fertilizer restrictions particularly impacted India's agricultural sector, which relies heavily on specialty fertilizers for high-yield crops. India imports approximately 80% of its specialty fertilizer supplies from China, making the restrictions especially concerning for farmers and the broader agricultural economy.
Strategic Importance
The lifting of these curbs holds immense strategic significance for India. Rare earth minerals are crucial for various industries including electric vehicles, wind turbines, and defense manufacturing. As ET has previously highlighted, India's dependence on Chinese rare earth imports has been a key concern in bilateral trade discussions.
Tunnel boring machines are essential for India's ambitious infrastructure projects, including metro rail systems and mountain tunnels. The restriction on these machines had the potential to delay several critical infrastructure developments across the country, according to industry sources quoted by ET.
Diplomatic Success
The assurance from Chinese Foreign Minister Wang Yi represents a significant diplomatic success for India. External Affairs Minister Jaishankar had raised these concerns during his visit to China in July, and the Chinese response during Wang Yi's visit indicates positive momentum in bilateral relations.
In his opening remarks during the meeting, EAM Jaishankar emphasized that the talks would cover "economic and trade issues, pilgrimages, people-to-people contacts, river data sharing, border trade, connectivity and bilateral exchanges," as reported by ET sources.
Market Impact
The news has already begun to impact Indian markets, with fertilizer companies showing positive movement. FACT (Fertilisers and Chemicals Travancore) shares jumped nearly 3% following reports of China lifting fertilizer export curbs, reflecting investor optimism about improved supply chains.
Industry analysts believe that the easing of Chinese export restrictions will help stabilize domestic prices and improve availability, directly benefiting fertilizer producers and ultimately Indian farmers.
Moving Forward
Jaishankar told his Chinese counterpart that the differences between the two countries should not become disputes, emphasizing the need for a "candid and constructive approach from both sides." He stressed that this endeavor must be guided by the three mutuals - mutual respect, mutual sensitivity, and mutual interest.
The Chinese Foreign Minister's visit comes at a crucial time, just ahead of Prime Minister Narendra Modi's proposed visit to China to attend the annual Shanghai Cooperation Organisation (SCO) summit.
As ET has consistently reported, this development marks a positive step in India-China trade relations, which have faced various challenges in recent years. The resolution of these three critical export issues could pave the way for broader improvements in bilateral economic cooperation.
The actual resumption of shipments will be closely watched by industry stakeholders, with reports indicating that some shipments may have already begun, according to sources cited by ET.