India, which is hugely import dependent for critical minerals, is the only developing country to have joined the elite grouping

As geopolitical tensions take hold and nations race to secure critical mineral supply chains in their pursuit towards transitioning to clean mobility and meet their green goals, India appears to have upped its game. During Prime Minister Narendra Modi’s visit to the US last month, India joined the Minerals Security Partnership, or MSP, a US-led alliance of 14 developed economies aimed at ensuring uninterrupted supply of critical minerals and rare earth essential for sustained economic growth. These minerals and metals are key to India’s ambition of becoming a manufacturing hub and transitioning to clean mobility, particularly its push to adopt electrical vehicles (EVs).

Within a week of joining the elite grouping, the government in New Delhi released a list of 30 critical minerals  and said it deems these minerals critical for India’s move towards cleaner technologies in electronics, telecommunications, transport and defence. The list, which will be updated periodically, includes critical minerals such as beryllium, bismuth, cobalt, copper, gallium, graphite, lithium, nickel, phosphorus, potash, and 17 rare earth elements (REEs).

Both the moves have been welcomed by the EV industry. Many say that being part of the MSP is a “great strategic step in the right direction”. Some also believe it will allow India access to critical technologies and investments to transform its transport sector and boost manufacturing.

What Is MSP?

The MSP grouping was founded in June 2022 by the US and its key partners such as Australia, Canada, France, Germany, Japan, South Korea, Sweden as “an ambitious new initiative to bolster critical mineral supply chains”. Its stated objectives include efforts to strengthen information sharing between partner countries, increase investment in secure critical minerals supply chains and develop recycling technologies. All the countries in the grouping, except India, are developed economies and need uninterrupted supply of critical minerals to keep growing

One of the key elements of New Delhi’s growth strategy hinges on the massive and rapid shift to clean mobility. In fact, the government aims to quickly decarbonise the transport sector by having EV sales accounting for 70% for commercial vehicles by 2030. This strategic shift towards clean mobility is also aimed at reducing India’s unrealistic crude oil import bills.  India has also stated its commitment towards becoming a net-zero emitter of greenhouse gases by 2070.

Fig 1: Image: Colbalt mine by Gwenn Dubourthoumieu // The Carter Center

Why is it important for India?

India is hugely import-dependent on most of the critical minerals, which are of limited availability in its geological reserves. These minerals are much-needed to manufacture EV batteries and the semiconductors required to run these vehicles and other sensitive electronics. At present, China holds two-fifths of global reserves of rare earths and it does not shy away from using its dominant position to achieve its political objectives, including by imposing curbs on exports of rare earths. Decades of targeted policy-making by Beijing ensured the Chinese rare earth industry flourished at a rapid pace. Last year, China accounted for 70% of world mine production of rare earths and the country possessed 85% of the world's capacity to process rare earth ores.

Many see India’s joining the MSP as a timely move to reduce its dependency on China for securing critical minerals.

Nitin Gupta, CEO of Attero Recycling, a clean tech pioneer, says the majority of the world today is moving away from China and adopting a “China plus One” strategy to diversify their supply chains and safeguard against monopoly. “That's what the US, the EU and others are trying to do. For India, it is a great strategic step in the right direction. If we can utilise this opportunity that exists from a geopolitical perspective and show the world that not only in intent but in execution as well, we can actually replace China in the majority of the areas that the world is needing China today.”

On the critical minerals list, Gupta says India has essentially made it clear that these metals and minerals are critical for it and “we need to focus our policies on making sure we are either Atmanirbhar (self-reliant) on these or we are signing trade pacts with partners and countries that we trust and respect.”

Rahil Gupta, co-founder & chief technology officer at HOP Electric Mobility, an integrated auto-tech electric mobility start-up, concurs with his industry colleague.

“It is critical for India to widen its reach among other sourcing centres and ensure availability of these minerals and rare earth elements (REEs) to remain self-sufficient in its endeavours towards the energy transition plans.”

“India’s entry into the MSP is a historic milestone that reflects its growing role and influence in the global arena. The initiative will go a long way in addressing India’s commitment to sustainable mobility and carbon neutral targets progressively.”

What exactly does India gain by joining MSP?

India, which is dependent on China to meet most of its requirements for rare earth minerals, needs to reduce that dependence. Being part of the MSP helps it in a number of ways.

  • Access. These critical minerals are essential for the production of electric vehicles, electronics, and other high-end products. Through MSP, India will gain access to a wider range of critical minerals. India could import critical minerals from MSP members at a lower cost, which would help to reduce the cost of electric vehicles in India.
  • Technology Transfer. The MSP members are committed to sharing technology and expertise in the mining and processing of critical minerals. This can help India in developing its own mining and processing capabilities, which will drive the growth of its electric mobility sector.
  • Investment. The MSP members are set to invest in the development of critical mineral projects and India can gain by attracting investment to the country.

Overall, the association is expected to significantly boost India’s efforts to secure access to critical minerals, technology, and investment for the growth of the electric mobility sector.

“With the immense potential in the clean mobility market, it becomes crucial to prioritise the localization of supply chains, starting from mining operations to the end products,” says Apoorv Shaligram, CEO of e-TRNL Energy, an Indian start-up in the energy storage space.

He says the recent discovery of 5.9 million tonnes of Lithium reserves in Jammu and Kashmir is an “encouraging” sign for the Indian EV market. However, he quickly adds, “it would be wise to focus on developing sources of Silicon and Phosphorus within India, as they play vital roles in the upcoming battery anode and cathode chemistries, respectively.”

Fig 2: Lithium. Getty Images

Lithium is a non-ferrous metal and is one of the key components in EV batteries. Of the several battery options available – such as Solid state batteries; Nickel-metal Hydride batteries, Lead-acid batteries, and Ultracapacitors – Lithium-ion batteries are considered the most efficient and preferred. Experts say Li-ion batteries have a high power-to-weight ratio and greater energy efficiency. Besides, most components of these batteries can be recycled. One challenge, though, remains their high cost.

Rohan Singh Bais, founder & CTO of Delhi-based Ziptrax Cleantech, which provides lifecycle management for Li-ion batteries, says the industry can help accelerate the development of sustainable critical energy minerals after India’s membership of the MSP.  “As an industry, we need to develop the critical minerals supply chain through investment into technical & commercial areas,” he adds.

Rajat Verma, Founder and CEO, Lohum Cleantech said India's induction into the group is first and foremost an acknowledgement of its role as a democratic anchor for the world and an alternative to China. “It is a recognition of India's industrial and research capabilities as well as its future market size,” he said.

The partnership offers a platform for India to become a counterweight to China and the way the country can do that is through Free Trade Agreements, G2G supply partnership and technology transfer and IP creation among others, he added.