India is actively pursuing a comprehensive strategy to bolster its supply of rare earth minerals. Commerce and Industry Minister Piyush Goyal recently announced plans to negotiate new trade agreements with nations like Chile and Peru, alongside ramping up domestic exploration efforts. The government is also keen on involving startups in the critical areas of recycling and processing these valuable resources.
These vital resources, which include copper, lithium, nickel, and cobalt, are indispensable raw materials. They power a vast array of industries, from advanced electronic goods to sophisticated fighter jets, underscoring their strategic importance.
Beyond traditional sectors, these minerals are also crucial for the burgeoning clean energy revolution, driving the production of electric vehicles and battery technologies. Globally, countries like Chile, Peru, and Australia possess significant reserves of these sought-after elements.
In its quest for resource security, India has already established a trade agreement with Australia. Currently, an Indian delegation is engaged in a new round of trade negotiations with South American countries, Chile and Peru, aiming to further diversify its mineral sources.
When questioned about the government’s approach to mineral shortages, Mr. Goyal pointed to these ongoing negotiations, implying that the Free Trade Agreements (FTAs) are a clear indicator of India’s proactive steps to secure supply.
The global supply chain for these minerals has faced significant disruptions, largely due to restrictions imposed by China, a dominant player in this sector.
Domestically, the focus is on intensifying exploration efforts. Minister Goyal highlighted discussions with innovative startups involved in recycling waste materials to extract rare earths. The goal is also to establish domestic processing facilities, reducing the current heavy reliance on a single global region for these crucial operations.
The Minister further advised industries to strategically diversify their supply chains. He emphasized that over-reliance on a single country for critical imports can lead to significant vulnerabilities.
He stressed the importance of thoroughly examining existing supply chains to identify and mitigate any excessive dependency on specific regions. In an era where trade can be weaponized, such singular dependencies make nations highly susceptible to external pressures.
Recalling instances where trade and supply chains have been weaponized, Mr. Goyal urged a focus on creating robust, self-sufficient, and self-reliant supply networks. He reiterated the need for multiple options to ensure national resilience and prevent vulnerabilities.
Separately, Mr. Goyal also mentioned the government’s work on developing guidelines for the recently introduced ₹10,000 crore ‘Fund of Funds Scheme’ (FFS) for startups, a significant initiative announced in the budget.
This scheme is designed to provide long-term funding, particularly targeting startups in the crucial manufacturing and high-technology sectors.
In a critical assessment, Mr. Goyal critiqued previous Congress governments, asserting that their Free Trade Agreements with regions like ASEAN and countries such as Japan and Korea were poorly negotiated, failing to adequately benefit India’s domestic industries.
Addressing an Assocham event, he noted that while these agreements facilitated increased exports from partner countries into India, Indian exporters faced considerable challenges accessing those same markets.
He highlighted the imbalance, stating that India’s exports struggled under these agreements, while imports from these nations saw significant growth.
Conversely, Mr. Goyal proudly stated that Free Trade Agreements finalized by the current NDA government, including those with the UAE, Mauritius, the EFTA bloc, and Australia, have successfully contributed to boosting India’s exports.