India seeks FTAs with countries that can support ‘Atmanirbhar’ journey in EVs
India has set a target of 2030 by when it wants all its vehicles converted into an electric platform. But with the latest face-off with China, which has created a bottleneck in the supply of raw materials, India is looking at countries in South America and Africa which are rich in minerals like Lithium and Cobalt.
India has already been reaching out to countries in the `Lithium Triangle’ – Argentina, Bolivia, and Chile in South America and has been meeting with officials in Congo, South Africa as they have huge deposits of Lithium and Cobalt. These two minerals are needed to realise its goal for converting all vehicles into EV by 2030.
In 2019, there had been hectic diplomatic as well as ministerial engagements with these countries and the main focus was on India seeking joint ventures, acquisition, as well as exploration rights in the Lithium mines and access to cobalt too.
These minerals are required not only for the EVs but also for making laptops, mobile phones, solar panel batteries etc.
The engagement with these countries has picked up recently, as the tensions with China has brought the import of raw materials to a standstill.
While Bolivia has committed investments in Lithium processing projects from companies in China and Germany including Xinjiang TBEA Group of China is planning to invest around $ 2.3 billion and Germany’s ACI Systems has a joint venture with the state-owned Yacimientos de Litio Bolivianos with a promised investment of $ 900 million for extraction in Uyuni.
Both India and Bolivia have agreed to a joint venture for setting up Lithium Battery/Cell production India and to facilitate Bolivian supplies of lithium Carbonate to India.
State owned (KABIL) consortium of three PSU companies including National Aluminum Company (NALCO), Hindustan Copper (HCL) and Mineral Exploration Corp Ltd., (MECL) have been travelling to the South American countries as well as to Congo and South Africa seeking possibilities of cooperation.
As has been reported by Financial Express Online the country has more than 40% of known reserves of Lithium, which is mostly located in Salar de Uyuni, the world’s largest salt flat rich in Lithium. It is a large ground covered with minerals and salt.
Top diplomats of the country claim that Argentina has the largest Lithium resources in the world. And this is based on the high exploration activity in recent years.
Chile has 48% of the total lithium reserves in the world, located mainly in the Salar de Atacama, and Salar de Maricunga. Global companies including SQM,
SCM, Rockwood, SLM, Mineria Li, Comino, Corfo, Codelco, Simbalik, Albemarle, among others are already present. There are other Salars too where the Lithium mineral is found and the exploration is going on.
The demand s expected to go up as this also used in solar panels and which use Lithium-ION based batteries and India has set a target of 100 GW of solar power generation by 2022.
Free Trade Agreement (FTAs)
The government has recently proposed a major shift in its Foreign Trade Policy under which it plans to explore FTAs with countries which can help India in its journey towards `Atmanirbhar Bharat’ mission and help in providing the raw materials as well as the critical components etc required for manufacturing activities.
The Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce has mining agreements and ink FTAs with countries which are resource-rich in Latin America and Africa.
An internal presentation by DPIIT focusing on efforts to boost industrial growth in India has suggested FTAs will help. And countries including Argentina, Bolivia, Chile, Congo, South Africa rich in mineral resources, especially lithium and cobalt have been identified.
How will the FTA help?
It is an agreement in which the member countries reduce tariffs on trade among themselves, and maintain their own tariff rates for trade with non-members.
An expert who wished to remain anonymous told Financial Express Online, “Over time India has tried to diversify its export destinations and import supplies. And, if it is gaining momentum through FTAs with these countries it only shows the resolve of the government to ensure regular and reliable import supplies for self-reliant manufacturing not only in an environment-friendly manner in the Automobile Sector but quite generally.” “This also reiterates that a self-reliant India is ready to engage with the world but without losing sight of Supporting domestic businesses. Any consideration of Such an FTA is a pragmatic strategy,” he concluded.
FTAs with countries in Latin America Region – South-South Cooperation
So far India already has a trade agreement with Chile, which is currently, negotiating the expansion of the existing agreement.
Talks in the India-Mercosur are getting delayed due to internal disagreement between Brazil and Argentina.
Following President Ram Nath Kovind’s visit to landlocked Bolivia last year, Indian side is planning to conduct a feasibility study to explore the possibility of signing the Free Trade Agreement with that country. Once the study is completed, the doors will open for starting negotiations and identify products on which the tariffs and other conditions could be lowered.
Financial Express Online has reported earlier that the two nations are keen on expanding their trade basket and to identify sectors which would help expand bilateral trade relations.
Since India and Bolivia are keen on diversifying trade and industrialization of its mineral resources, a trade agreement will help. There are large deposits of silver, tin, copper, gold which is of interest to India.