Months after the US announced India’s inclusion into Pax Silica, a Washington-led initiative to counter China’s dominance in new age sectors such as Artificial Intelligence (AI), India and the US on Tuesday signed a bilateral India-US Critical Minerals Framework, focusing on securing the supply, mining, and processing of critical minerals and rare earth elements.
Minister of External Affairs S Jaishankar, after the Quad Foreign Ministers’ meeting, said that the new framework aims to deepen cooperation between the two countries across the entire critical minerals and rare-earth supply chain, including mining, processing, recycling, and related investment.
While details on the framework are awaited, this signalling of future cooperation comes after the Indian industry began facing shortages of rare earth magnets late last year, when China launched a licensing regime, effectively choking exports of rare earth elements during its trade war with the US. As India has little processing capacity and is 100% import-dependent for some key critical minerals such as cobalt, lithium, nickel, rare earth elements (REEs) and silicon, it has been aggressively expanding collaborative efforts. China controls 90% of global critical mineral processing.
“The Framework builds on continuing India – U.S. cooperation aimed at strengthening supply chain security in critical sectors. On 20 February 2026, India became a signatory to the U.S. – led Pax Silica initiative. India also signed a Joint Statement on the “India-U.S. AI Opportunity Partnership” as a bilateral addendum to the Declaration, the Ministry of External Affairs said.
“Earlier, External Affairs Minister Jaishankar had also participated in the Foreign Ministers’ Meeting on critical minerals hosted by Secretary Rubio in Washington, D.C. on 4 February 2026. India and the United States are also partnering under the Forum on Resource Geostrategic Engagement (FORGE) initiative,” the ministry said.
Regulatory push to attract investments
As part of efforts to attract investment in strategic sectors like critical minerals, the government, in March this year, announced calibrated changes in the Foreign Direct Investment (FDI) policy for investments from Land Bordering Countries (LBCs), or those that share a land border with India.
The changes were finally made after six years when the government made its prior approval mandatory for Indian entities receiving investments from LBCs in April 2020. The changes, introduced through a document known as Press Note 3 or PN3, were to curb potential takeovers of local companies during the slump in equity valuations around Covid-19.
To fast-track decisions on investment proposals from LBCs, the government announced that applications from “specified sectors”, such as capital goods, electronic capital goods, electronic components, polysilicon, ingot-wafer and rare earth magnets, shall be processed and decided within 60 days.
However, such cooperation aimed at attracting investments to particularly address strategic vulnerabilities has not yet benefited India. India saw gross Foreign Direct Investment (FDI) inflows rise to a new record high of $94.53 billion in 2025-26, up 17% from the previous year, although the net figure was a mere $7.65 billion, data released last week by RBI showed.
Notably, Inflows had risen sharply in February on the back of global investor sentiment reversing in the wake of the signing of an interim trade deal between India and the US early that month, which eliminated the penal 25% tariff and reduced the reciprocal tariff to 18% from 25%. Foreign Portfolio Investors (FPIs) had also net bought Indian financial assets in February to the tune of $4.17 billion. However, once the West Asia war began at the end of February, foreign capital has exited Indian shores in droves: $13.6 billion in March, $7.56 billion in April, and $2.62 billion so far in May.
India-US bilateral efforts on critical minerals
Cooperation on critical minerals also figured prominently during Prime Minister Narendra Modi’s official visit to the United States in February 2025. Under the India-US TRUST (“Transforming the Relationship Utilising Strategic Technology”) initiative, both countries agreed to strengthen trusted and resilient supply chains in sectors such as semiconductors, critical minerals, advanced materials, and pharmaceuticals.
“Recognising the strategic importance of critical minerals for emerging technologies and advanced manufacturing, India and the United States will accelerate collaboration in research and development and promote investment across the entire critical mineral value chain, as well as through the Mineral Security Partnership, of which both the United States and India are members,” the India-US joint leaders’ statement read.
Both countries also committed to intensifying efforts to deepen cooperation in the exploration, beneficiation, and processing, as well as recycling technologies of critical minerals.
“To this end, the leaders announced the launch of the Strategic Mineral Recovery initiative, a new U.S.-India program to recover and process critical minerals (including lithium, cobalt, and rare earths) from heavy industries like aluminium, coal mining and oil and gas,” the joint statement added.
India's External Minister, S Jaishankar, with US Secretary of State, Marco Rubio in Washington D.C. (official state photograph by Freddie Everett) 
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