India seeks critical minerals partnership agreement with the US, to open investment offices in Silicon Valley

India has proposed a Critical Minerals Partnership Agreement (CMPA) with the US to enable domestic electric vehicle (EV) companies to benefit from the American market.

During the recent visit of India’s Commerce and Industry Minister, Piyush Goyal, to the US, a Memorandum of Understanding (MoU) was signed between the two countries to advance mutual cooperation in the supply chain of critical minerals such as cobalt, copper, lithium, and nickel.

In addition to their use in the production of EV batteries, these rare earths are essential for clean energy technologies, including wind turbines.

While Piyush Goyal suggested that the MoU on critical minerals should be upgraded to a partnership agreement as a starting point for a Free Trade Agreement (FTA), he noted that the US Congress is currently not enthusiastic about pursuing an FTA with any country.

A partnership agreement on critical minerals could potentially allow Indian companies to benefit from the tax credits on EVs provided by the US Inflation Reduction Act (IRA), which seeks to boost manufacturing capabilities.

India’s push for a critical minerals agreement with the US, similar to the US-Japan agreement signed last year, could help Indian companies gain from duty concessions and other advantages when selling their products in the American market. Duty benefits are typically extended to American companies or those from countries with a trade pact with the US.

In addition to discussions on technology transfer, green hydrogen, green ammonia, and bio-sciences, Goyal mentioned that several American companies have expressed a strong interest in investing in India.

One American firm is reportedly planning to invest over $10 billion in data centres and quantum computing for artificial intelligence (AI) in India. To further attract investment, India is also aiming to establish investment offices in New York and Silicon Valley, staffed by representatives from Invest India and the National Industrial Corridor Development Corporation (NICDC).