India seeks critical mineral agreement with US, hopes for a trade pact: Report

Commerce minister Piyush Goyal said the country has sought a critical mineral partnership agreement (CMPA) with the United States as he hopes for talks on a broader trade pact between the two nations. 

“I had suggested that critical mineral MoU (memorandum of understanding) to be converted to a critical mineral partnership and become a starting point to become an FTA (Free Trade Agreement),” Piyush Goyal said at a press briefing in New Delhi on October 19. 

Earlier this month, the two countries signed a new memorandum of understanding (MoU) to expand and diversify critical minerals supply chains, with the aim of leveraging the two countries’ complementary strengths to ensure greater resilience in the critical minerals sector. 

Priority areas of focus include identifying equipment, services, policies and best practices to facilitate the mutually beneficial commercial development of the US and Indian critical minerals exploration, extraction, processing and refining, recycling and recovery. 

The MoU fell far short of a full critical minerals trade deal that would allow India to benefit from the $7,500 US electric vehicle tax credit, Reuters reported. 

Minerals-focused trade deals are one way that the US President Joe Biden’s administration hopes to open up access for trusted allies to a $7,500 per vehicle EV tax credit introduced in last year’s climate-focused Inflation Reduction Act, the report added. 

Critical minerals, including cobalt, copper, lithium, nickel, and rare earths, are essential for clean energy technologies like wind turbines and electric vehicles. These minerals are particularly important for manufacturing batteries for electric cars. The proposed CMPA could help Indian firms gain duty concessions and other benefits in the American market. 

Last year, the US and Japan signed a similar agreement. The US provides benefits under its Inflation Reduction Act to American firms or those from countries with an FTA with the US. An official said that converting the MoU into a partnership agreement would give it trade deal status, allowing India to benefit from the US electric vehicle tax credit.