Think win-win: India should try some mineral diplomacy in its relations with the US

So far, he has made no specific demands of India, but we have made tactical tariff cuts as a pre-emptive peace offering. Since Trump had a bone to pick over Harley-Davidson the last time he was in power, New Delhi dropped import duties from 50% to 30% on motorcycles above 1,600cc capacity (and to 40% on smaller bikes). 

Satellite receivers, synthetic flavour essences and other items also saw placatory cuts. Most US imports face single-digit rates anyway, as government officials have pointed out. On the whole, our tariff tweaks have been minor, with some duty cuts nullified by cess hikes, others aimed at lowering input costs in select sectors, and a few rates upped for industry-specific relief. 

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While the Centre claims a dip in India’s average tariff rate, its budget expects customs to mop up around ₹1.6 trillion in duties next fiscal year, more than in 2024-25. Since we do have space for sweeping reductions, we should go in for them. Local producers would find it easier to snap into supply chains that span borders and also be driven to be more cost competitive.

India’s engagement of the White House, however, must also account for the US-China trade war that has just flickered up. In retaliation to Trump’s barriers for Chinese imports, Beijing has opted to raise some of its own. As a pointed weapon, too, with items apparently targeted in a way that might jeopardize jobs in belts of Trump’s electoral support. 

Beijing’s bigger counter-threat, though, may be its export controls for rare metals, a regime framed in 2023 for the supply of ‘dual use’ stuff (which can serve military ends too). While alternate sources exist, China is the world’s dominant producer of many scarce metals used as inputs for high-tech hardware that could impact the global balance of power. 

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Late last year, China cut off shipments to the US of antimony, gallium and germanium, which are used for high-end chips and weapons. China could clamp down on other exports too, such as molybdenum powder and tungsten, both of which have defence uses. China also churns out the bulk of lithium that clean-tech industries depend on. 

Last month, Beijing moved to curb overseas transfers of know-how for the extraction and processing of gallium and lithium. While the US scouts for rare-but-vital minerals elsewhere on the planet, China has quite an enviable arsenal for a trade war.

Do China’s export clamps give us an opening? Possibly. 

To begin with, it would be crucial to remind the White House of India’s Quad role in favour of a free and open Indo-Pacific, with strategic resources deployed for the purpose. The huddles of Brics, in contrast, can easily be portrayed as a side-show. 

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Second, while India also imports key minerals, we have budgetary money marked out for mineral self-sufficiency. Crucially, we can highlight our discovery in Jammu and Kashmir of lithium-ore reserves. Estimated at 5.9 million tonnes, this stash can be exploited with US help. A win-win pact suggests itself. 

As gallium is extracted as a trace element from bauxite, the chief raw material for aluminium, Indian investments in this industry also offer some scope for mineral diplomacy. We may lack an arsenal for trade hostilities, but we could try subtle forms of leverage.