NEW DELHI

India's Trade Minister Piyush Goyal announced on Saturday that the country is actively pursuing a critical mineral partnership agreement. This initiative, if successful, could serve as a stepping stone towards a more comprehensive Free Trade Agreement (FTA) between the two nations.

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Speaking at a press briefing in New Delhi, Goyal revealed that he had proposed elevating the recently signed Memorandum of Understanding (MoU) on critical minerals to a full-fledged partnership. "I had suggested that critical mineral MoU be converted to a critical mineral partnership and become a starting point to become an FTA," the minister stated, highlighting India's ambitious vision for bilateral trade relations with the US.

This announcement comes on the heels of an initial pact signed earlier this month between India and the United States. The agreement focuses on strengthening supply chains for critical minerals such as lithium and cobalt, which are essential components in the production of electric vehicles (EVs) and clean energy technologies. However, the current MoU falls short of a comprehensive critical minerals trade deal that would enable India to benefit from the USD 7,500 US electric vehicle tax credit.

The push for a more robust mineral partnership aligns with the broader objectives of both nations. For India, it represents an opportunity to secure a stable supply of critical minerals, crucial for its growing clean energy sector and ambitious EV adoption plans. For the United States, such partnerships are part of President Joe Biden's strategy to diversify and secure supply chains for critical minerals, reducing dependence on countries like China.

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The US administration has been actively pursuing minerals-focused trade deals as a means to extend access to the EV tax credit introduced in last year's Inflation Reduction Act to trusted allies. This USD 7,500 per vehicle incentive is a key component of the US's efforts to accelerate the transition to electric vehicles and combat climate change.

However, the path to a full-fledged FTA between India and the US is likely to be complex and time-consuming. Both nations have significant differences in various sectors, including agriculture, digital trade, and intellectual property rights. Negotiations would need to address these issues while balancing the interests of domestic industries and international competitiveness.

The proposed critical mineral partnership could serve as a testing ground for broader cooperation. Success in this sector might build trust and establish frameworks that could be expanded to other areas of trade. It would also demonstrate both countries' commitment to addressing global challenges such as climate change and supply chain resilience.

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India's proactive stance in seeking this partnership reflects its growing confidence on the global stage and its recognition of the strategic importance of critical minerals in the 21st-century economy. As one of the world's fastest-growing major economies and with ambitious clean energy targets, India is positioning itself as a key player in the global transition to sustainable technologies.

For the United States, deepening ties with India in this sector aligns with its broader Indo-Pacific strategy. Strengthening economic bonds with India, the world's largest democracy, could serve as a counterbalance to China's influence in the region and in global supply chains.

The potential impact of such a partnership extends beyond bilateral relations. A successful India-US critical mineral agreement could set a precedent for similar arrangements with other countries, potentially reshaping global supply chains for these vital resources.

As negotiations progress, industry observers will be keenly watching for signs of how this initiative might impact global markets for critical minerals, as well as the broader landscape of international trade agreements. The outcome of these talks could have far-reaching implications for the clean energy transition, geopolitical alignments, and the future of US-India economic relations.