India-Chile FTA: Strategic Partnership for Critical Mineral Supply Chain Security

India is intensifying its diplomatic and economic engagement with Chile to finalize a Comprehensive Economic Partnership Agreement (CEPA), while according to officials from the Ministry of Commerce and Industry, the negotiations have reached an advanced stage, focusing on securing a stable supply of critical minerals. This agreement is viewed as a cornerstone for India's ambition to become a global manufacturing hub, particularly in high-tech sectors that require specific raw materials found in abundance in the South American nation.

Securing Critical Minerals for Domestic Manufacturing

In the evolving global economic landscape, critical minerals such as lithium, copper, cobalt, and molybdenum have transitioned into strategic assets. These elements are vital for the production of semiconductors, electric vehicle (EV) batteries, and renewable energy infrastructure, while currently, the global supply chain for these minerals is heavily concentrated, with China maintaining a dominant position. India's move to establish a formal trade framework with Chile is a calculated step to diversify its sourcing and mitigate risks associated with over-reliance on a single supplier.

Chile's Role as a Global Mineral Powerhouse

Chile holds a preeminent position in the global mining industry. It's the world's largest producer of copper, accounting for approximately 23% of global output. On top of that, it ranks second globally in lithium production, contributing nearly 20% of the world's supply. For India, which has set ambitious targets for green energy and electric mobility, the smooth procurement of these minerals is essential. Chile also possesses significant reserves of rhenium and molybdenum, which are critical for aerospace and specialized industrial manufacturing under the 'Make in India' initiative.

Significant Growth in Bilateral Import Figures

The economic synergy between the two nations is reflected in recent trade statistics. 60 billion. 15 billion during the same period, the sharp rise in imports underscores the growing demand within the Indian industrial sector for Chilean raw materials. This trade momentum provides a strong foundation for the transition from a Preferential Trade Agreement (PTA) to a more comprehensive CEPA.

Strategic Involvement of Indian Corporate Entities

Both public and private sector enterprises in India are actively pursuing opportunities in Chile's mining landscape. Coal India Limited has recently received board approval to establish a holding company in Chile to explore and develop critical mineral assets. In the private sector, the Adani Group has entered into a Memorandum of Understanding (MoU) with Codelco, Chile's state-owned mining giant. This collaboration aims to review and potentially develop three major copper projects, marking a significant step toward direct Indian participation in Chilean resource extraction.

Expanding the Scope of Economic Cooperation

The bilateral relationship, which was initially governed by a 2006 Preferential Trade Agreement, is now evolving into a multi-faceted partnership. The proposed CEPA aims to go beyond simple tariff reductions on goods. It's expected to include provisions for digital trade, investment protection, and technical exchange in mining technology. By establishing this comprehensive framework, India seeks to facilitate long-term investments by Indian firms in Chile, ensuring a dedicated pipeline of essential minerals required for the country's future industrial growth.