India's MoU with the US on Critical Minerals
India's Memorandum of Understanding (MoU) with the United States on critical minerals represents a significant advancement in their bilateral engagements. This is expected to pave the way for further commitments under the US Inflation Reduction Act (IRA).
Critical Minerals Partnership Agreement (CMPA)
- India has proposed a Critical Minerals Partnership Agreement (CMPA) with the US, especially in sectors like electric vehicles.
- The MoU on critical minerals supply chains was signed in October, aiming to leverage the complementary strengths of both countries to enhance resilience in the critical minerals sector.
- New Delhi anticipates that converting the MoU into a partnership would equate to a Free Trade Agreement (FTA), allowing India to benefit from the EV tax credit under the US IRA.
Benefits of US Inflation Reduction Act (IRA)
- The IRA provides a tax credit of up to $7,500 per electric vehicle, dependent on the origin of critical minerals used in EV batteries.
- The tax credit requires a percentage of materials to originate from the US or countries with an FTA with the US.
- This access is expected to attract substantial foreign investment and facilitate large-scale component manufacturing in India.
International Market Access Developments
- China: Granted market access for Indian exports of key fish species, including Pampus chinensis (Chinese pomfret), Pampus argenteus (silver pomfret), and Scylla serrata (mud crab).
- Russia: Allowed the export of dairy products from two listed establishments and egg products from six establishments in India.
FTA Negotiations
- India is engaged in FTA negotiations with several countries, including the UK, EU, Oman, Peru, and Sri Lanka.
- The India-Sri Lanka Economic and Technology Cooperation Agreement has completed its 14th round of negotiations by July 2024.
- Negotiations have concluded on most chapters, excluding specific goods lines related to garments.