(MENAFN- Live Mint) India is ramping up its efforts to forge a critical minerals partnership agreement with the US, according to commerce and industry Minister Piyush Goyal.
Speaking on Saturday on the impact of such an agreement, Goyal noted that this initiative could evolve into a more comprehensive trade agreement, potentially unlocking new economic cooperation between the two nations.
“The critical minerals partnership agreement could advance towards foreign trade agreement (FTA) status,” Goyal emphasized, highlighting the strategic implications of the initiative.
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His remarks followed a recent visit to the US, during which India and the US signed a memorandum of understanding (MoU) aimed at establishing a secure supply chain for essential minerals such as lithium, cobalt, and rare earth elements. These minerals are critical for technologies like electric vehicles (EVs) and renewable energy systems.
The MoU not only underscores the commitment to strengthen the supply chain but also aims to foster collaboration in extraction, processing, and product development, including partnerships with third countries to ensure a seamless flow of resources.
Mint had earlier reported that Goyal and US commerce secretary Gina Raimondo were scheduled to discuss critical minerals supply strategies during the sixth meeting of the India-US Commercial Dialogue on 3 October in Washington. Key topics on the agenda included the Generalized System of Preferences (GSP), trade barriers, and the Indo-Pacific Economic Framework (IPEF).
The increasing geopolitical tensions and shifts in global trade have intensified the urgency of securing access to critical minerals. China's dominance in sectors such as electric vehicles has prompted nations to diversify their supply chains. Goyal's comments reflect India's awareness of this landscape and its ambition to become a significant player in the global energy transition.
Critical minerals are increasingly viewed as strategic assets, especially as countries aim to reduce fossil fuel dependence and transition to greener energy solutions. Securing a reliable supply chain for these resources is pivotal to India's goal of becoming the“clean energy capital of the world,” as Goyal has articulated.
India's pursuit of a critical minerals agreement parallels a recent deal between the US and Japan. In 2023, the US established a critical minerals agreement with Japan, designated as an FTA by the US Department of Treasury for tax credit benefits under the Inflation Reduction Act (IRA). This designation allows Japan to benefit from tax credits for EVs that meet US domestic content requirements, enhancing their market competitiveness.
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Currently, the US imports 49% of its critical minerals from FTA countries, with 44% from non-FTA nations and 7% from China, a country designated as a“Foreign Entity of Concern.” This classification underscores ongoing trade tensions and the global push to reduce reliance on Chinese sources for these critical resources.
Rajesh Agarwal, additional secretary at the commerce ministry, expressed India's eagerness to secure similar benefits from a critical minerals agreement with the US, potentially enabling Indian companies to capitalize on opportunities presented by the IRA.
“A partnership would not only secure India's mineral supply but also open up the US market for Indian companies involved in EV production and clean energy technologies,” Agarwal noted.
India's merchandise exports to the US have surged by 54.4%, rising from $54.3 billion in 2018 to $83.8 billion in 2023, underscoring the growing economic ties between the two countries.
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