Officials said that the conversion of the MoU into a partnership agreement would give it the status of an FTA that would enable India to benefit from the EV tax credit that the US gives under its Inflation Reduction Act. The tax credit depends on critical minerals’ origins, requiring that a percentage of materials in EV batteries come from the US or countries with which the US has an FTA.
The access to the US EV tax credit of up to USD 7,500 per vehicle would attract substantial foreign investment and make large-scale manufacturing of components in India commercially viable. The MoU between India and US falls short of a full critical minerals trade deal that would allow India to explore the USD 7,500 US EV tax credit.
Last year, Japan signed a deal with the US Trade Representative’s office, and it has allowed Japanese automakers to fully participate in the credit. Goyal also said that India is opening up investment offices in New York.
India, US to Restructure CEO Forum
The investment offices will have representatives from Export Credit Guarantee Corporation, Invest India and National Industrial Corridor Development Corporation, and would aid investments in India’s upcoming smart cities.
During his visit, the two sides discussed green hydrogen and green ammonia among clean energy solutions, as well as ways to secure the supply chains which include third countries. The minister said that the mines ministry is executing this aspect in critical minerals. “The thinking of the American community is changing and is far more positive. They are now talking of technology transfers, IP laws and co-development of new innovative ideas such as pharma, digitatechnology, telecom for 6G and some areas of defence,” Goyal said. During his US visit, he said, businesses did not raise the issue of H-1B visas. “H-1B visas are history now. I have invited companies to set up GCCs (global capability centres) in India,” the minister added.
The minister also said that the EU, which has delayed the start of mandatory full traceability scheme for imports of rough and polished diamonds until March 1, 2025, may not be able to implement it then. India, home to almost 90% of the world’s cutting and polishing of diamonds, will be impacted by the decision of the G7 group of countries to ban all imports of rough diamonds directly from Russia and extend it to include Russian diamonds that have been processed in third countries.
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