What Happened
- India is in advanced negotiations with Chile for a Comprehensive Economic Partnership Agreement (CEPA) that would grant long-term access to critical minerals such as lithium, copper, cobalt, and molybdenum.
- For the first time, India is proposing a dedicated chapter on critical minerals within an FTA framework, signalling the strategic importance of mineral supply chain security.
- Coal India's board has approved the establishment of an intermediate holding company in Chile to pursue lithium and copper mining opportunities.
- Commerce Minister Piyush Goyal stated that the India-Chile FTA talks "will be closed soon," with both sides committed to an outcome in 2026.
- The negotiations build on the existing India-Chile Preferential Trade Agreement (PTA), originally signed in 2006 and expanded in 2017.
Static Topic Bridges
Critical Minerals and India's Strategy
Critical minerals are elements essential for modern technologies — electric vehicles, semiconductors, renewable energy systems, defence applications, and electronics — where supply concentration creates strategic vulnerabilities. India released its first Critical Minerals List in 2023, identifying 30 minerals deemed critical for the country's economic development and national security.
- India's Critical Minerals List (2023): includes lithium, cobalt, nickel, rare earth elements (REEs), graphite, vanadium, tungsten, antimony, beryllium, and others
- Chile is the world's largest copper producer (accounting for approximately 27% of global production) and the second-largest lithium producer (after Australia)
- India's Critical Mineral Mission was announced in the Union Budget 2024-25 to accelerate domestic exploration and secure overseas mineral assets
- KABIL (Khanij Bidesh India Limited) — a joint venture of NALCO, HCL, and MECL — was established in 2019 to identify, acquire, and develop strategic mineral assets abroad
- India has signed critical mineral partnerships with Australia (2022), Argentina, and now seeks similar arrangements with Chile and Peru
Connection to this news: The proposed India-Chile CEPA with a dedicated critical minerals chapter represents a new approach in India's FTA architecture, directly linking trade agreements to strategic mineral supply chain diversification amid growing geopolitical competition for these resources.
Free Trade Agreement Architecture — PTA, FTA, CEPA, and CECA
India employs various types of trade agreements with differing depths of integration. A Preferential Trade Agreement (PTA) involves partial tariff concessions on a limited number of products. A Free Trade Agreement (FTA) covers substantially all trade with reciprocal tariff elimination. A Comprehensive Economic Partnership Agreement (CEPA) goes beyond tariffs to include services, investment, competition policy, and other areas. A Comprehensive Economic Cooperation Agreement (CECA) is similar in scope to CEPA.
- India-Chile PTA: signed March 2006, effective August 2007; expanded in September 2016 (effective May 2017) — India received concessions on 1,798 tariff lines; Chile on 1,031 tariff lines
- India-Chile CEPA: Terms of Reference signed on May 8, 2025; active negotiations ongoing since mid-2025
- India's major CEPAs/FTAs: Japan CEPA (2011), South Korea CEPA (2010), UAE CEPA (2022), ASEAN FTA (2010), Australia ECTA (2022), India-UK CETA (2025), EFTA deal (2024)
- WTO rules (GATT Article XXIV) require FTAs to cover "substantially all trade" — generally interpreted as 85-90% of bilateral trade
- India's bilateral trade with Chile: approximately $2.6-3.0 billion; India exports automobiles, pharmaceuticals, textiles; imports copper, gold, minerals
Connection to this news: The upgrade from a limited PTA (covering specific tariff lines) to a comprehensive CEPA reflects India's strategic intent to embed critical mineral access within a broader trade framework, moving beyond conventional tariff negotiations.
Electric Vehicle Supply Chain and Mineral Dependency
The transition to electric mobility requires massive quantities of specific minerals — lithium and cobalt for batteries, copper for wiring and motors, rare earth elements for permanent magnets, and nickel for high-energy-density cathodes. India's EV policy aims for 30% electric vehicle penetration by 2030, creating a significant projected demand for these minerals that domestic reserves cannot fully meet.
- Lithium-ion battery cathode chemistries: NMC (nickel-manganese-cobalt), LFP (lithium iron phosphate), NCA (nickel-cobalt-aluminium) — each requires different mineral inputs
- India's first significant lithium reserves were found in Reasi district, Jammu & Kashmir (2023) — estimated 5.9 million tonnes of inferred resources
- FAME scheme (Faster Adoption and Manufacturing of Electric Vehicles): Phase I (2015), Phase II (2019-2024), succeeded by PM E-DRIVE scheme (2024)
- National Mission on Transformative Mobility and Battery Storage was established in 2019
- Global lithium production is concentrated: Australia (47%), Chile (30%), China (15%) — creating supply chain vulnerability
Connection to this news: India's FTA with Chile is directly tied to securing lithium and copper supply chains for the EV transition. Chile's position as the world's second-largest lithium producer and largest copper producer makes it a strategically critical partner for India's clean energy and manufacturing ambitions.
Key Facts & Data
- Chile: world's largest copper producer (~27% of global output) and second-largest lithium producer
- India-Chile PTA: originally signed 2006, expanded 2017; CEPA negotiations began 2025
- India's Critical Minerals List (2023): 30 minerals identified as critical
- Coal India's Chile subsidiary: approved for pursuing lithium and copper assets
- India's lithium reserves (Reasi, J&K): 5.9 million tonnes inferred resources (discovered 2023)
- India-Chile bilateral trade: approximately $2.6-3.0 billion
- India's exports to Latin America: only 3.5% of total exports in FY 2024-25
- KABIL (Khanij Bidesh India Limited): established 2019 for overseas mineral acquisition