India, US sign agreement to strengthen critical mineral supply chain

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Last Updated07/10/2024

India’s Commerce Minister Piyush Goyal signed an agreement with US Commerce Secretary Gina Raimondo to cooperate on strengthening supply chains in India and US for lithium, cobalt and other critical minerals.

India's Commerce Minister Piyush Goyal and US Commerce Secretary Gina Raimondo have signed a memorandum of understanding (MOU) to enhance cooperation between the two nations on the supply of critical minerals such as lithium and cobalt.
These minerals are vital components in the electric vehicle (EV) industry and clean energy applications.
The agreement, signed during Minister Goyal’s visit to the US, aims to strengthen supply chains for critical minerals in both countries, marking a significant step towards promoting green energy initiatives.

The agreement comes at a time when both countries are ramping up efforts to develop resilient and reliable supply chains for essential minerals that are integral to the production of EV batteries and renewable energy technologies. The pact's primary focus includes:
- Exploration, extraction, and processing of critical minerals.
- Recycling and recovery of materials for sustainable use.
- Mutually beneficial commercial development of U.S. and Indian industries.
This MOU reflects a broader agenda to bolster cooperation between India and the US in key sectors, ensuring the availability of critical resources while advancing their clean energy goals.

Minister Piyush Goyal emphasized the multi-faceted nature of the partnership, which goes beyond mineral supply chains. The collaboration is expected to cover various areas such as:
- Open supply chains for materials essential to the clean energy transition.
- Joint efforts in technology development and investment flows.
- Enhancing global cooperation, particularly involving mineral-rich nations in Africa and South America, to create a diversified and stable supply of critical minerals.
This expanded scope ensures that the partnership is not only bilateral but also opens doors for a global approach to tackling the challenges of securing access to critical minerals.

Lithium, cobalt, and other rare minerals are essential for the production of EV batteries, solar panels, and other renewable energy technologies. As the world shifts towards clean energy, the demand for these minerals has surged, making supply chain security a top priority. Both India and the US recognize that a stable supply of these minerals is crucial for meeting their green energy targets and reducing reliance on fossil fuels.

While the MOU represents significant progress, it falls short of a comprehensive trade deal for critical minerals. A full-fledged trade deal would have allowed India to tap into benefits like the $7,500 US electric vehicle tax credit.
This tax credit, which was granted to Japan after signing a deal with the US Trade Representative’s office, enables Japanese automakers to fully participate in the US EV market.
India’s exclusion from such a deal signals that while the MOU is a major step forward, there is still room for deeper collaboration, particularly in unlocking economic benefits for Indian industries in the US market.