India Seeks Binding Pact with US on Critical Minerals to Boost Manufacturing

After agreeing to a memorandum of understanding (MoU) with the United States (US) concerning critical minerals, India is now looking to establish a formal agreement on these minerals with both countries. This agreement will open up the opportunity for India to establish itself as a center for manufacturing and increase its exports.

“I had suggested that the critical mineral MoU be converted to a critical mineral partnership and become a starting point to an FTA (free trade agreement),” Commerce and Industry Minister Piyush Goyal told reporters on Saturday.

A partnership on critical minerals between India and the US will have a legally binding nature, unlike an MoU. If such a collaboration occurs between the two nations, India may receive 'FTA-like status' and qualify for certain advantages under the US Inflation Reduction Act. In March, the US signed a comparable deal with Japan concerning minerals for electric vehicle batteries.

Nonetheless, with the US election scheduled for next month, a ruling on India's suggestion will be made once the new administration assumes control. The call for a more comprehensive agreement coincides with Goyal's trip to the US earlier this month. Both parties agreed to a new memorandum of understanding (MoU) to broaden and vary crucial mineral supply chains, in order to enhance resilience in the critical minerals industry.

The minister added that while in New York and Washington, talks were held about a potential overhaul of the CEO Forum. The India-US CEO Forum enables private sector representatives to give input on strengthening bilateral economic relations between India and the US, by offering recommendations to both governments based on their views, concerns, and suggestions.