India-Chile FTA talks signal strategic push to secure critical minerals

The India-Chile free trade agreement (FTA) talks are emerging as an important development for India’s manufacturing ambitions. Currently in advanced stages of negotiation, the proposed pact is widely viewed as a strategic move to secure access to critical minerals, with Chile holding some of the world’s richest reserves of lithium and other critical resources.

This India-Chile FTA has attracted far less public attention than other headline trade discussions. While the spotlight remains on high-visibility negotiations such as the India–US framework and the long-awaited EU–India deal, this agreement has been progressing more quietly. At a time when control over mineral supply chains increasingly translates into geopolitical leverage, this partnership carries implications that extend well beyond a routine trade arrangement.

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Why this partnership carries strategic weight

Globally, critical minerals have changed from being merely industrial material inputs to now being recognised as being important, strategic assets. Lithium, copper, cobalt, rhenium and molybdenum can all be found in every part of the economy supporting everything from electronics/electric vehicles, to renewable energy infrastructure and advanced manufacturing. Control over these supply chains is becoming closely associated with industrial capability - and, in some cases, national security.

Chile occupies a distinctive place in this picture. The South American nation is widely known for its vast lithium reserves, a cornerstone material for batteries used in electric vehicles and energy storage. It also hosts sizeable deposits of copper, rhenium, molybdenum and cobalt, all integral to electronics manufacturing, automotive production and the solar energy ecosystem.

For India, which is expanding domestic manufacturing through programmes like Make in India while also accelerating its shift toward clean energy, reliable access to these minerals could help ensure steady supplies and may also reduce costs over time.

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From early trade links to a broader strategic pact

Economic ties between the two countries are not new. India and Chile implemented a preferential trade agreement in 2006, creating an early framework for engagement.

The proposed Comprehensive Economic Partnership Agreement seeks to move beyond tariff reductions toward deeper economic integration. Along with trade in goods, the pact is expected to cover digital services, investment promotion and cooperation, MSMEs, and - perhaps most importantly collaboration in the critical minerals space.

The expanded scope signals a shift away from purely transactional commerce toward a partnership that aligns more closely with future technological and economic priorities.

Negotiations also appear to be nearing completion. Commerce and Industry Minister Piyush Goyal said that the talks would conclude soon, stressing that the agreement would help open access to critical minerals for Indian businesses. He added that India is actively pursuing trade deals with several developed economies, placing the Chile pact within a broader trade and industrial strategy.

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Trade numbers hint at untapped potential

Despite the strong strategic logic, bilateral trade remains relatively modest - underscoring the headroom for growth.

In 2024–25, India’s exports to Chile declined by 2.46 per cent to USD 1.15 billion. Imports, meanwhile, climbed sharply by 72 per cent to USD 2.60 billion. The divergence reinforces Chile’s role as a supplier of raw materials while also pointing to India’s opportunity to move up the value chain by securing inputs that can power domestic manufacturing rather than relying on volatile global markets.

Recent developments indicate that the strategy may already be shifting from discussion to execution. A week ago, Coal India Ltd’s board approved the creation of an intermediate holding company in Chile to pursue opportunities in critical minerals, including lithium and copper. In a regulatory filing, the company confirmed it would hold 100 per cent equity in the proposed entity - a notable step for the state-owned coal producer and a sign of how public sector enterprises are aligning with India’s evolving resource security priorities.

Private industry appears to be moving along a similar path. In November last year, Chilean state-owned miner Codelco and India’s Adani Group signed an agreement to explore copper projects in Chile. The arrangement involves reviewing three projects and establishing a pathway for potential joint development.

The new India-Chile free trade agreement is taking form as not just an economic agreement but as also a strategic tool to develop India’s access to critical minerals now under increasing geopolitical stress on global supply chains. India's combination of diplomacy and public-sector initiatives with private-sector engagement will hopefully result in an increasingly diverse and resilient resource base for minerals.

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