India-US Critical Minerals Framework
India and the United States have signed a bilateral framework focused on securing the supply, mining, and processing of critical minerals and rare earth elements. This initiative is part of a broader strategy to counter China's dominance in sectors like Artificial Intelligence (AI).
Background and Context
- China controls 90% of global critical mineral processing, creating vulnerabilities for countries like India.
- India is 100% import-dependent for some minerals such as cobalt, lithium, nickel, and rare earth elements.
- The Indian industry faced shortages of rare earth magnets due to China's trade policies.
Key Initiatives and Agreements
- The India-US Critical Minerals Framework aims to enhance cooperation in the critical minerals supply chain, including mining, processing, recycling, and investment.
- India is included in the US-led Pax Silica initiative and signed a joint statement on the "India-U.S. AI Opportunity Partnership."
- The FORGE initiative promotes engagement in resource geostrategic matters.
FDI Policy and Economic Impact
- India has made changes in its Foreign Direct Investment (FDI) policy to attract investments in strategic sectors like critical minerals.
- In 2025-26, India saw a record gross FDI inflow of $94.53 billion, but the net figure was only $7.65 billion due to capital outflows.
- Foreign Portfolio Investors (FPIs) reversed their investment trend following geopolitical tensions, leading to significant capital outflows in early 2026.
India-US Cooperation Initiatives
- Under the India-US TRUST initiative, both countries aim to strengthen resilient supply chains in sectors such as semiconductors and critical minerals.
- The Mineral Security Partnership involves collaboration in research, development, and investment across the critical mineral value chain.
- The launch of the Strategic Mineral Recovery initiative focuses on recovering and processing critical minerals from industries like aluminum and coal mining.
