India Pursuing Chile, Peru Trade Deals to Secure Rare Earth Minerals Supply

The government is working on several initiatives to enhance the availability of rare earth minerals, including pursuing trade agreements with Chile and Peru, encouraging domestic exploration activities, and collaborating with startups on recycling and processing capabilities, Commerce and Industry Minister Piyush Goyal announced, news agency PTI has reported.

Critical or rare earth minerals such as copper, lithium, nickel and cobalt are essential raw materials which have applications in various industries ranging from automotive to electronic goods to fighter jets. These minerals also fuel the growth of rapidly growing clean energy technologies, including electric vehicles and battery manufacturing. Countries like Chile, Peru and Australia have reserves of these minerals.

India-Australia Trade Pact

India already has implemented a trade pact with Australia and is negotiating with South American nations Chile and Peru. The Indian team is visiting the two South American countries for the next round of trade talks.

"Look at Chile and Peru, think about it. Why am I doing FTA with them in the first place? It gives you the answer," he was quoted as saying when asked about steps the government is taking to deal with the shortage of these minerals.

China's Export Restrictions Disrupt Global Supply Chains

China, the major player of these minerals, has imposed restrictions on the supply, which is disrupting the supply chains worldwide.

"In our country, we are looking at increasing explorations and I have been talking to start-ups engaged in this area both for recycling of the waste, from which we can extract rare earths, and we are also in dialogue with start-ups to see if we can create the processing facility in India, which is currently concentrated in one geography," Goyal said.

Diversify Supply Sources: Goyal

The minister also suggested that the industry diversify their supply chains, as dependency on one country for the import of any product will create problems.

"We must assess all our respective supply chains, see whether they are overly dependent on any particular geography," he said, adding if it is dependent on one country, you are prone to vulnerability, particularly in a world where trade is being used as a weapon.

"We have seen weaponisation of trade and supply chains. Make your supply chains robust, wherever possible, be self-sufficient and self-reliant. Make sure we have a sufficient number of options so that we are not vulnerable," he added.

Fund of Funds Scheme

He also said that the government is formulating guidelines for the newly announced ₹10,000 crore Fund of Funds Scheme (FFS) for startups, unveiled in the Budget.

It is focusing on manufacturing and high-technology sectors, which require longer-term funding.

Previous FTA Negotiations

Further, Goyal criticised the previous Congress governments for not properly negotiating free trade agreements with ASEAN, Japan and Korea, and now they are not benefiting the domestic industry.

Speaking at an ASSOCHAM event here, Goyal said that while these countries can increase their exports to India, domestic exporters are finding it difficult to enter their markets.

"We face difficulty when we export," he said, adding that only imports have grown from these countries.

On the other hand, he said, the FTAs concluded by the NDA government are helping increase India's exports. This government has implemented such pacts with the UAE, Mauritius, the EFTA bloc and Australia.