In October 2024, India and the United States signed a Memorandum of Understanding (MoU) to expand and diversify critical mineral supply chains, focusing on essential resources like lithium and cobalt, which are vital for electric vehicles and clean energy applications. This MoU aims to leverage the complementary strengths of both nations to enhance the resilience of critical mineral supply chains.
Building upon this foundation, India has proposed elevating the MoU to a Critical Minerals Partnership Agreement (CMPA). Commerce and Industry Minister Piyush Goyal emphasized that such an agreement could serve as a stepping stone toward a broader Free Trade Agreement (FTA) between the two countries. The CMPA is envisioned to provide Indian firms with duty concessions and other benefits in the U.S. market, particularly in sectors like electric vehicles.
The proposed CMPA is similar to a free trade agreement but specifically targets the critical minerals sector. Last year, the U.S. and Japan signed a similar agreement. The U.S. provides benefits under its Inflation Reduction Act to American firms or those from countries with an FTA with the U.S.
The CMPA is expected to facilitate collaboration in areas such as exploration, extraction, processing, and recycling of critical minerals, thereby reducing dependence on other sources and strengthening the strategic partnership between India and the United States.
