India seeks critical minerals in trade deal with US

India is seeking to include critical minerals in its trade deal with the United States. Officials believe this could unlock tax benefits for electric vehicles and batteries that use these essential resources. India's push comes as discussions on a new Bilateral Trade Agreement (BTA) gain momentum. In October, India and the U.S. signed an agreement to strengthen the supply chain for critical minerals, which include lithium and cobalt. India ranks third globally in rare earth reserves, while the U.S. ranks seventh. However, without a comprehensive trade agreement, India does not qualify for U.S. tax credits for electric vehicle purchases. Indian commerce officials aim to upgrade their existing cooperation plan into a full trade agreement. The current Memorandum of Understanding (MoU) does not provide the tax benefits available to countries with a complete trade deal with the U.S. Buyers of electric cars in the U.S. can get significant tax credits, but Indian-made electric vehicles don’t benefit due to the lack of this agreement. Trade discussions are intensifying, especially as India hopes to secure critical minerals through foreign investments. Currently, India relies heavily on imports, sourcing about 95% of its lithium and cobalt from countries like Australia and Chile. Experts stress the importance of building processing facilities in India to reduce this dependence. While both countries are interested in enhancing their trade relationship, challenges remain. Many critical minerals are sourced from third countries, complicating direct access for India. Experts suggest focusing on subsidies for processing and developing local capabilities as key steps for India’s self-reliance in this sector. India's critical minerals mission aims to improve its domestic production and reduce imports. It has identified 30 essential minerals that are vital for sectors like energy, electronics, and electric vehicles. With the right policies, India hopes to emerge as a significant player in the global market for these crucial resources.