Amid growing concerns over China’s dominance in critical minerals, which enables it to control the clean tech supply chain—especially in solar equipment and electric vehicle production—India and the U.S. have signed an agreement to bolster the critical mineral supply chain.
This agreement comes in the wake of unexpected restrictions imposed by China, including bans on the export of gallium and germanium—key components in the semiconductor industry—as well as a prohibition on exporting technology for manufacturing rare earth magnets and for extracting and separating critical materials.
India’s Minister of Commerce and Industry, Piyush Goyal, and U.S. Secretary of Commerce, Gina Raimondo, signed a new memorandum of understanding (MoU) on Thursday aimed at expanding and diversifying critical mineral supply chains. According to an official statement, the goal is to leverage the complementary strengths of both countries to enhance resilience in the critical minerals sector.
“Key areas of focus include identifying equipment, services, policies, and best practices to promote the mutually beneficial commercial development of critical minerals in both the U.S. and India. This includes exploration, extraction, processing and refining, recycling, and recovery,” stated the U.S. Department of Commerce.
Discussing the MoU at the Center for Strategic and International Studies in Washington, Commerce Minister Goyal characterized the partnership as multi-dimensional, highlighting its emphasis on open supply chains for materials, technology development, and investment flows to advance green energy.
Goyal further emphasized the importance of including other nations in the partnership, particularly mineral-rich countries in Africa and South America.
“We will continue to expand cooperation in new areas and enhance existing partnerships by leveraging the vast opportunities for trade and commercial collaboration between India and the U.S.,” the minister stated in a social media post.
The agreement follows a recommendation from the U.S. last month urging India to “expand and protect” its clean energy manufacturing. India’s Production Linked Incentive (PLI) schemes have invested over $4.5 billion to stimulate emerging clean energy manufacturing; however, a joint India-U.S. statement noted that “additional policies are essential” to protect these investments from “global market dynamics” and “thin profit margins.”
The Economic Survey 2023-24 also highlighted that China’s manufacturing trade surplus has been growing since 2019, driven by weak domestic demand and increasing industrial capacity. This mismatch between domestic supply and demand in China has led Chinese companies to explore additional markets abroad.
The survey pointed out coercive actions taken by China to limit India’s access to solar equipment, stating: “…in response to India’s anti-dumping probe against Chinese entities, China has been quietly blocking India’s access to solar equipment.”
To safeguard domestic solar photovoltaic (PV) module manufacturing, including projects under the PLI scheme, the Ministry of New and Renewable Energy (MNRE) reinstated the Approved List of Models and Manufacturers (ALMM) order on April 1.
This order prohibits domestic solar projects from utilizing imported modules, mainly from China, which are sold at substantially lower prices. According to CRISIL, in June 2024, imported modules were priced at an average of 9.1 cents per watt (CIF basis), whereas domestic modules averaged 18 cents per watt.
Earlier last month, the ministry revealed plans to expand the ALMM order to include solar cells starting in April 2026. The PLI scheme for high-efficiency PV modules, which has a total budgetary allocation of Rs 24,000 crore distributed over two tranches, also provides incentives for solar cell production.
