File photo of a mine Photo: VCG

India has proposed a partnership agreement on critical minerals to the US,MKsports hoping it could lead to a broader free trade agreement that would help local electric vehicle (EV) makers benefit in the US market, the Economic Times reported on Sunday. 

Observers said that the proposal is purely driven by geopolitical motives rather than commercial interests. As India's key mineral resources are heavily dependent on Chinese imports, analysts remain skeptical on whether India's recent moves on mineral fields could achieve the desired results, or just make it a pawn of the US Indo-Pacific strategy that aims at countering China.  

The proposed agreement is an upgrade to the bilateral memorandum of understanding (MOU) that India and the US signed earlier in October to cooperate on strengthening supply chains in the two countries for lithium, cobalt and other critical minerals used in EVs and clean energy applications, according to another report of the newspaper.

The MOU is a non-binding agreement, while the upgraded one will be binding in nature and India will be able to get "FTA-like status," said a report by the Business Standard. An FTA with the US would make India eligible for some EV tax credits under the US Inflation Reduction Act and provide a boost to "Make in India."

Qian Feng, director of the research department at the National Strategy Institute at Tsinghua University, told the Global Times on Sunday that India has been actively seeking to diversify key mineral resources and elevate its influence in related fields in recent years, for "alleged national energy security risks over a high level of dependence on Chinese imports."

Earlier in October, India's Minister of Commerce and Industry Piyush Goyal, and US Secretary of Commerce Gina Raimondo signed a new MOU to expand and diversify critical mineral supply chains, according to a report by the Indian Express. 

In 2023, India joined the Minerals Security Partnership, a US-led partnership to create critical energy minerals supply chains. The country reportedly is actively pursuing strategic partnerships in Africa and Latin America to secure critical minerals. 

"Those geopolitically driven actions would cause competition to flare up between China and India in related fields, and have a certain influence on China's overseas key mineral supplies," Qian noted. 

Observers noted that any US decision on India's proposal will only be taken after the US presidential election in November. 

"But there's no doubt that the US has been ramping up efforts to rope in India to play a greater role in its so-called Indo-Pacific strategy aiming to contain China," Qian noted.