India's big move: Breaking China's grip on critical minerals with global deal

New Delhi (The Uttam Hindu): India's major trade deals with the US and the European Union are being discussed worldwide. While the agreement with the European Union is considered important, negotiations with the US are also in the headlines. However, the real game-changing step towards making India the next superpower is being taken now. The Modi government is moving rapidly towards finalizing a major Free Trade Agreement (FTA) with Chile, a key South American country. It is believed that this agreement will give a huge boost to India's manufacturing capabilities.

Preparations to break China's monopoly

To thrive in today's rapidly changing global economy, resources like critical minerals, not just capital, are crucial. Minerals like lithium, copper, cobalt, rhenium, and molybdenum are no longer just industrial inputs but strategic assets. These minerals are like oxygen for electronics, electric vehicles (EVs), renewable energy, and advanced manufacturing. Currently, China holds almost complete control over the global supply chain for these minerals and has repeatedly used this dominance as a weapon to disrupt supplies to other countries. Therefore, it is crucial for India to end its dependence on China. This deal with Chile is a major and very concrete step in this direction.

Chile has a vast mineral wealth

Chile is not just a simple trading partner; it is a global powerhouse of critical minerals. Most importantly, Chile possesses vast reserves of lithium, which powers the modern world. Lithium is needed everywhere, from smartphone batteries to electric cars and large energy storage systems. Furthermore, Chile is the world's largest producer of copper, producing approximately 23% of the world's copper. Furthermore, it is second only to Australia in producing 20% ​​of global lithium needs. It also possesses abundant rhenium, molybdenum, and cobalt, which will prove to be a boon for India's "Make in India" and clean energy goals.

Not just business, now a new era of partnership

India and Chile's relationship isn't new. The 2006 Preferential Trade Agreement (PTA) between the two countries laid a strong foundation for this relationship. However, the scope of the negotiations has now expanded significantly. The discussion is no longer focused on reducing taxes on certain goods, but rather on signing a Comprehensive Economic Partnership Agreement (CEPA). This new agreement includes direct cooperation in trade, digital services, investment, and critical minerals. Commerce and Industry Minister Piyush Goyal has also hinted at its imminent finalization. According to data, India's imports from Chile are projected to reach $2.60 billion in the 2024-25 fiscal year, a massive 72% increase, highlighting the dire need for Chilean raw materials for Indian industry.

Private companies also tightened their belts

India's private sector is not lagging behind in this government initiative and is fully prepared to capitalize on this golden opportunity. Indian companies are now establishing a direct presence in Chile. Recently, the board of Coal India approved the creation of a holding company in Chile, which will explore the potential of critical minerals there. Meanwhile, the Adani Group also took a major step and signed a significant agreement with Chile's state-owned company Codelco in November last year. The main objective of this agreement is the exploration and development of copper projects in Chile, under which three major copper projects will be thoroughly reviewed.