Will critical minerals treaty with US bring investments?, Pg18

Key Highlights:

• India and the US signed the India-US Critical Minerals Framework to secure the supply, mining, and processing of critical minerals and rare earth elements.
• The framework aims to deepen cooperation across the entire supply chain, including mining, processing, recycling, and related investment.
• India is heavily import-dependent for minerals like cobalt, lithium, nickel, REEs, and silicon, with China controlling 90% of global processing.
• The Indian government has made changes to FDI policy to attract investment in strategic sectors like critical minerals.
• Gross FDI inflows rose to $94.53 billion in 2025-26, a 17% increase, but net inflows were $7.65 billion.
• Cooperation on critical minerals was a key part of Prime Minister Modi's visit to the US in February 2025 under the India-US TRUST initiative.

Detailed Insights:

• The Critical Minerals Framework emerged after India faced shortages of rare earth magnets due to China's export restrictions during its trade war with the US.
• India's regulatory changes include fast-tracking investment proposals from Land Bordering Countries (LBCs) in specified sectors within 60 days.
• The changes to FDI policy were initially introduced in 2020 via Press Note 3 (PN3) to prevent takeovers during the Covid-19 equity slump.
• Despite increased FDI inflows, foreign capital has recently exited Indian markets due to geopolitical tensions, specifically the West Asia war.
• The India-US TRUST initiative aims to strengthen supply chains in sectors like semiconductors, critical minerals, advanced materials, and pharmaceuticals.
• Both countries will collaborate in research and development and promote investment through the Mineral Security Partnership.

Key Concepts Involved:

• Critical Minerals: Minerals essential for modern technologies and economic growth, facing supply risks.
• Rare Earth Elements (REEs): A set of seventeen metallic elements crucial in various high-tech applications.
• Foreign Direct Investment (FDI): An investment made by a firm or individual in one country into business interests located in another country.