What to Read in Indian Express Editorial( Topic and Syllabus wise)

Editorial 1 : Tokyo Tutorial: Countering China’s Rare Earths Choke

Context: Rare earth elements (REEs), comprising 17 critical minerals, lie at the centre of modern technological manufacturing. They are indispensable for electric vehicles, wind turbines, smart phones, semiconductors, defence equipment and robotics. Despite their strategic importance, global supply chains are highly vulnerable because China dominates mining, processing and export of rare earths, accounting for over 60–70% of global production and nearly 85–90% of world refining capacity.

China’s Rare Earths Leverage:

• China has repeatedly used rare earths as a geopolitical tool.
• The most notable instance occurred in 2010, when a maritime dispute with Japan in the East China Seatriggered Beijing’s abrupt suspension of rare earth exports to Japan.
• The move exposed Japan’s extreme vulnerability as it was dependent on China for over 90% of its rare earths needs.
• This episode became the turning point in Japan’s strategic thinking, pushing Tokyo towards supply chain diversification and self-reliance.
• In recent years, China has also tightened export controls on critical minerals like gallium, germanium and graphite, citing “national security concerns”.
• Such measures have reinforced global concerns about China’s control over strategic minerals and the risks associated with overdependence.

Japan’s Multi-Pronged Strategy for Rare Earth Resilience:

• Japan responded with a comprehensive, long-term rare earths security strategy aimed at reducing dependence on China. The strategy’s key pillars include:
• Diversified Supply Sources: Japan aggressively sought alternative suppliers across the world. It partnered with Australia, Vietnam, India, and several African and Latin American countries. One of the most significant initiatives was Japan’s collaboration with Australia’s Lynas Corporation, the world’s largest rare earths producer outside China. This move substantially reduced Japanese firms’ vulnerability.
• Recycling of Rare Earths: Japan is a global pioneer in rare earth recycling technologies. It has developed processes to extract rare earths from discarded electronics, hybrid vehicle batteries, and industrial waste. This reduces pressure on mining and provides an environmentally sustainable source of critical minerals.
• Technological Innovation and Substitution: Japan invested heavily in research to develop technologies that either reduce rare earth usage or find substitutes. Its advancements in motor technology and materials engineering helped lower industry-level dependence on specific rare earth elements.
• Stockpiling for Strategic Security: Tokyo built strategic reserves of rare earths to cushion against supply disruptions. These stockpiles effectively provide a buffer of several months for key industries.
• State Support and Public–Private Partnerships: Japan’s government collaborated closely with private industry, providing financing, insurance, and diplomatic support to Japanese firms operating abroad. It also undertook long-term agreements with partner nations to ensure supply reliability.

Impact of Japan’s Policy:

• Japan’s dependence on China for rare earth imports has fallen from over 90% in 2010 to below 60% today.
• This demonstrates how long-term planning, diversification, and technology investments can reduce strategic vulnerability.
• Japan today is considered a global model for rare earths risk mitigation.

India’s REE Exposure and Lessons from Japan:

• India imports a significant portion of rare earth elements despite having its own monazite reserves along the coasts of Kerala and Odisha.
• However, most Indian mineral extraction is restricted due to regulatory barriers, technological limitations, and lack of private sector participation.
• India’s dependence on Chinese rare earths remains substantial.

Key lessons for India from the Japanese approach include:

• Diversify supply chains through partnerships with countries like Australia, Vietnam, and African nations.
• Promote rare earth recycling, a largely untapped domain in India.
• Invest in R&D for processing technologies and material substitution.
• Create strategic mineral stockpiles for defence and manufacturing sectors.
• Allow private sector participation under stringent regulation to scale domestic extraction.
• Integrate rare earths strategy with Make in India and advanced manufacturing goals.

Way Forward:

Japan’s rare earths strategy shows how a country can navigate resource vulnerabilities through diversification, innovation, state-industry collaboration, and strategic foresight. As geopolitics increases pressure on global supply chains, nations like India must consider similar approaches to secure their technological and strategic autonomy. Rare earths resilience is no longer merely an industrial necessity; it is a pillar of economic security and national power.

 

Editorial 2 : Lower taxes spur buying, but jobs and incomes will have to grow

Context: The Indian economy is currently navigating a challenging phase shaped by domestic policy decisions, global uncertainties, and evolving consumption patterns. Recent data indicate that lower tax burdens and an improved supply environment have supported consumption growth. However, the sustainability of this demand revival hinges critically on employment generation and meaningful income expansion.

Consumption boost through lower taxes and supply-side improvements:

• The government’s efforts to rationalize indirect taxes and reduce logistics bottlenecks have played a central role in spurring consumption.
• GST rate rationalisation and targeted cuts in import duties have reduced the cost of goods, especially in sectors like electronics, automobiles, and FMCG.
• Correspondingly, India’s non-oil goods exports have displayed resilience, aided partly by front-loaded demand in advanced economies before tariff increases take effect.
• Industrial production data reflects consistent growth in manufacturing, supported by robust performance in capital goods, construction materials, and food processing.
• A good monsoon and increased procurement support prices have strengthened rural sentiment.
• These developments have collectively driven moderate growth in domestic consumption during the first half of the year.

Exports supported but External risks persist:

• On the external front, India’s merchandise exportsgrew at a modest pace despite global headwinds.
• High US tariffs on certain goods created a temporary surge in shipments before the tariff hike took effect.
• Nevertheless, prolonged geopolitical uncertainties, weak global growth, and supply chain realignments continue to cast a shadow on export prospects.
• Capital flows are likely to remain volatile amid global monetary tightening.
• While India has benefited from steady remittances and robust services exports, the risks of global financial fragilities remain pertinent.

Services Sector Remains a Key Strength:

• India’s services sector continues to act as a major stabilizer.
• Sectors like IT, business services, travel, financial services, and communication have shown consistent expansion.
• Global Capability Centers (GCCs) have been scaling up operations in India, boosting high-skilled employment and raising foreign investment inflows.
• However, even as services exports contribute significantly to the current account, domestic demand in services such as retail, housing, and hospitality will need deeper support from employment-led income growth.

Government Spending and Fiscal Expansion:

• Government expenditure has played a counter-cyclical role.
• Capital expenditureespecially on transport infrastructure, energy corridors, and digital connectivity has remained a core driver of economic activity.
• Yet, concerns about future fiscal consolidation remain, especially given the widening revenue deficit stemming from lower tax collections.
• While lowering taxes stimulates consumption in the short term, it may reduce fiscal flexibility unless offset by higher economic growth, improved compliance, or expanded tax bases.

Employment as the Critical Missing Link:

• Lower taxes alone cannot sustain long-term consumptionunless household earnings rise.
• Employment generationhas not kept pace with the expanding working-age population.
• Sectors like textiles, construction, and MSMEs which traditionally absorb large labour pools have been slow to fully recover post-pandemic.
• Automation trends and the global slowdown further complicate the employment scenario.
• To ensure durable consumption growth, India needs:
• Higher-quality job creation, especially in manufacturing and formal services
• Greater female labour force participation
• Skilling and reskilling initiatives aligned with emerging industries
• Policy incentives for labour-intensive sectors

Way Forward:

Lower taxes and improved supply conditions have provided short-term momentum to consumption. Yet, without strong employment creation and rising household incomes, this momentum cannot be sustained over the medium term. The Indian economy’s next phase of growth will depend less on tax stimulus and more on generating stable, productive, and broad-based income opportunities for its population. Ensuring this transition is crucial for achieving durable, inclusive, and resilient economic growth.