India Confirms Chinese Rare Earths Licences, Assesses US Sanctions on Russian Oil

New Delhi: India found itself navigating competing pressures from global powers as New Delhi confirmed Chinese rare earths licenses for Indian companies while simultaneously working to address Washington's expanded sanctions targeting Russian oil exporters.

The developments unfolded as US President Donald Trump and Chinese President Xi Jinping held their first face-to-face talks in six years in South Korea, with Beijing announcing a one-year suspension of rare earths export controls immediately following the summit.

The restrictions, first introduced in early October, required foreign companies to obtain licences to export any products containing more than 0.1% domestically sourced rare earths or manufactured using China’s extraction, refining, magnet-making or recycling technologies.

At the weekly media briefing on Thursday (October 30), Ministry of External Affairs (MEA) spokesperson Randhir Jaiswal said, “Yes, we confirm that some Indian companies have received licences for importing rare earth magnets from China.” 

Asked whether the recent US-China talks and resulting relaxations would have any bearing on India, he replied, “As far as the question of the latest talks and relaxations that have happened on between US and China as to what, how it's going to play into our domain, that I will come back to you. We have to look at, I am not aware of the technicalities, but we will come back to you”.

According to a report by CNBC-TV18, four Indian firms – Continental India, DE Diamond, Hitachi, and Jay Ushin – have received the first set of licences to import China’s tightly controlled rare earth magnets. The companies, which supply components to automakers such as Maruti, were granted approval on the condition that the resources would not be exported to the United States or used for defence purposes.

The rare earths breakthrough came as New Delhi confronts a more immediate challenge from Washington – sweeping US sanctions on Russia's oil sector announced October 22. The US Treasury Department's decision to sanction giants Rosneft and Lukoil, along with numerous subsidiaries, takes effect November 21 and represents Washington's most aggressive move against Russian energy exports since the Ukraine conflict began.

In the first response from the government, Jaiswal said India was “studying the implications of the recent US sanctions on Russian oil companies”. 

“Our decisions naturally take into account the evolving dynamics of the global market. Our position on the larger question of energy sourcing is well known. In this endeavour, we are guided by the imperative to secure affordable energy from diverse sources to meet the energy security needs of our 1.4 billion people,” he said.

The MEA spokesperson’s word echoed his earlier statement in response to Trump claiming that India had agreed to stop buying Russian oil. On October 16, Jaiswal had said India’s procurement policy was based on “broad-basing our energy sourcing and diversifying as appropriate to meet market conditions”.

Following the Ukraine war, India shifted a significant portion of its oil purchases from the Gulf to Russia, accounting for just about 1% of its total crude imports to as high as 40% at one point. The emphasis on diversification by the Indian government spokesperson was seen as a signal that India would begin reducing its dependence on Russian crude.

Reliance Group had said after the latest sanctions on the two Russian oil exporters that it was in the process of “recalibration of Russian oil imports” and that the conglomerate “will be fully aligned to GOI (Government of India) guidelines”.

Russian President Vladimir Putin is slated to visit India next month for an annual summit. Describing relations with Moscow as “important”, Jaiswal said both sides “are working to further enhance their engagement in several areas, economic areas, in space, in technology, on trade and several other issues.”

Complicating India’s response to the new US sanctions is the fact that New Delhi and Washington are in the midst of finalising a trade deal aimed at lowering tariffs from India’s perspective.

India currently faces the highest US tariffs on its imported goods. It had first been hit with a 25% reciprocal levy over the trade imbalance between the two countries, which was doubled in August with another identical levy as a penalty for New Delhi’s continuing purchases of Russian oil.

“We continue to remain engaged with the US side on finalising the trade deal. Both sides are continuing to hold discussions. For any further update, I would refer you to the Ministry of Commerce,” Jaiswal said on Thursday.

Meanwhile, India faces an additional geopolitical challenge after US President Donald Trump announced his upcoming meeting with a single line: “The G2 will be convening shortly”.

As The Wire had observed, the US president’s use of the G2 term reflected Washington’s view of a “joint condominium with China, where the two major powers would jointly deal with global problems, rather than of containment.”

In August, external affairs minister S. Jaishankar had referred to the G2 concept floated during Barack Obama’s presidency as an example of the fluctuations in US–India ties. “So there have been issues. There were issues even with China during Obama’s time, there was this whole idea of a G2,” he said.

At the weekly briefing, questions were raised about Trump’s reference to the G2 and its implications for India, but there was no response from the MEA spokesperson.

There was also no clear answer to Trump’s announcement that he had authorised the immediate resumption of nuclear weapons testing.

“…on our position on nuclear issues or where India stands on several aspects of nuclear matters. We have spoken about it on several occasions, so I would request you to look at our statements,” Jaiswal said.

The informal ‘Quad’ grouping of India, United States, Australia and Japan, which had been revived during Trump’s first term and had formed a central pillar of the Indo-Pacific strategy, has shown no signs of encouragement from Washington in recent months. During his packed six-day, three-nation trip to Asia, Trump did not mention it even once in public remarks.

India was to host the annual leaders’ summit this year, but there has been no indication of any planning so far.

“The Quad is a valuable forum for discussion on shared interests in a number of areas. Any Leaders’ Summit is scheduled through diplomatic consultations among the four partners,” said Jaiswal.

The only silver lining in India’s ties with the US has been the short reprieve granted to allow operations at Iran’s Chabahar port, which will enable New Delhi to strengthen its engagement with Taliban-run Afghanistan.

“I can confirm that we have been granted an exemption for a six-month period,” Jaiswal told a weekly news briefing, referring to the port.

Last month, the United States had notified that it would revoke the sanctions waiver for Iran’s Chabahar port on September 29, ending a seven-year exception that had allowed India to operate the facility as a route to Afghanistan and Central Asia.

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