An FTA no one is talking about can give India a strategic edge
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.
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.
Key Details
- 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
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.
Key Details
- 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
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.
Key Details
- 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
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.
- 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