United States Vice-President J.D. Vance recently highlighted the U.S.’s willingness to cooperate with India more closely on energy and defence. India’s foreign policy establishment outlined the need for cooperation on energy, defence, technology and the mobility of people. The developments may have been news, but the issues are not new. These topics have increasingly defined India-U.S. relations over the years despite changes in administration, but with some change in emphasis. There is an opportunity now for renewed investment in them.
India’s energy security will be guided by three imperatives: having sufficient energy resources at predictable prices, minimal disruptions in supply chains, and progress towards an increasingly sustainable energy mix. Nuclear energy and critical minerals will matter in these respects and can be the bedrock of further deepening energy and technology partnership between Washington and New Delhi.
A critical minerals compact
The energy transition will unfold not only via electrons but also with elements. China’s restrictions in April on exports of rare earths were just the latest move in periodic disruptions for more than a decade. On the one hand, China controls nearly 90% of global rare earth processing capacity. On the other, it leverages this market power to serve its strategic purposes. The result: the minerals needed for new energy technologies, advanced electronics or defence equipment are contingent on fragile global supply chains.
In 2024, India and the U.S. signed a memorandum of understanding to diversify these supply chains. Three principles must now guide India-US cooperation on critical minerals.
First, critical minerals must be viewed as the pillar of multiple sectors, and not just as a mining silo. They are needed across the economy — and in the strategic sectors on which India and the U.S. wish to collaborate. This broad framing prioritises long-term strategy and enables cross-sectoral skills and technology exchange.
Second, policies for critical minerals must play out at bilateral and plurilateral levels. They must establish guarantees of supply and frameworks for cooperation. Demand creation, not supply coercion, must drive this relationship. An India-U.S. critical minerals consortium could look into joint exploration and processing. India, with its emerging mineral exploration base, and the U.S., with its deep capital and technology, should co-invest in third-country projects across Africa, South America, and Southeast Asia.
Beyond the bilateral relationship, the Quad (including Japan and Australia) can be a capability multiplier. This includes collaboration on minerals processing technology. Further, data transparency and traceability of these minerals are crucial. For this, establish a dedicated India-U.S. Mineral Exchange — a secure digital platform for real-time trade, investment, and collaboration on critical minerals. This can especially help vulnerable industries such as electric vehicles, aerospace, and semiconductors. India and the U.S. should also co-develop a blockchain-based traceability standard for critical minerals, inspired by the EU’s Battery Passport.
Moreover, India and the U.S. should build joint strategic stockpiles of key minerals to safeguard supply chains against geopolitical or trade disruptions, leveraging existing storage infrastructure in both countries (such as India’s Strategic Petroleum Reserves or the US National Defense Stockpile) for cost-effective deployment.
India has made early moves — becoming the first non-G-7 member of the Mineral Security Partnership — and it will host the Quad summit later this year. It is an opportunity to formalise these specific approaches. The Quad countries are also exploring joint engagement with mineral-rich nations.
Third, patience will be key. While a battery plant may take two years to build, exploration of mines and building processing facilities take between 12 to 16 years. A durable India-U.S. critical minerals partnership must be structured with a 20-year horizon and interim targets, consistent with the initial goals of India’s own Critical Minerals Mission. To realise these ambitions, India and the U.S. must also invest in the ‘plumbing’ of the energy partnership: data-sharing protocols, investment tracking, workforce development, and innovation corridors under platforms such as the U.S.-India Initiative on Critical and Emerging Technology (iCET).
Nuclear energy as next frontier of linkages
As India’s electricity demand surges, we need a reliable source that complements the intermittency of solar and wind to build a stable, secure grid. Even as battery costs have fallen dramatically, nuclear power offers another firm, low-carbon source essential to achieving India’s net-zero goals.
India has an ambitious goal of achieving 100 GW of nuclear power capacity by 2047. Converting this into action will need a shift in momentum. Currently, nuclear energy contributes just over 8 GW, or about 2% of India’s installed capacity. To meet the 2047 target, India must commission approximately 5GW-6 GW annually from the early 2030s. Studies by institutions, including the Council on Energy, Environment and Water (CEEW), suggest that achieving net zero by 2070 could require nuclear capacity exceeding 200 GW under certain scenarios.
To realise this vision, India must implement three pivotal reforms. First, shorten deployment timelines to ensure scale. Reducing the build time of nuclear projects from, say, nine to six years could cut the levelised cost of electricity by 8%. This calls for standardised designs, faster approvals, and skilled project delivery.
Second, enable private sector participation. That means having credible offtakers to reduce risks, structure competitive bids, and offer long-term purchase commitments. Small Modular Reactors, with their lower capex and flexibility and lower land requirement, become bankable only when private capital has clear incentives and predictable returns. Applications include the use of nuclear energy for green steel or to service rapidly rising demand for Artificial Intelligence. The overall capital requirement for 100 GW of nuclear power is enormous: up to $180 billion by 2047. The exposure of domestic banks and non-banking financial companies to the power sector is approximately $200 billion. We must rewire our financial system to support this transition. The growth of nuclear as a viable source of energy and international cooperation rests on assurances of clear policies and offtake and payment guarantees, collaboration with global firms for tech transfer and co-creation, and rules and standards for waste management.
Issue of safety
Third, amend the Civil Liability for Nuclear Damage Act, 2010 to enable private investments in nuclear power plants. India’s indigenous reactor designs can be modularised. The recent approval for Holtec International to transfer SMR technology to Indian companies, including Larsen & Toubro and Tata Consulting Engineers, is an example of the potential of India-U.S. collaboration in this direction. However, India should always prioritise nuclear safety by adopting advanced waste handling and decommissioning technologies, especially as it could lead the manufacturing of Small Modular Reactors (SMRs). With smaller emergency zones and air-cooling capability, SMRs suit water-scarce regions but demand robust, centralised waste management and repurposing strategies from the start.
The IMF’s World Economic Outlook report (April 2025) shows concerning levels of global uncertainty amid trade and tariff tensions. For India’s energy security and sustainable economic development, bilateral relations between India and the U.S. must offer greater assurance in strategic and shared interests. India’s continued growth story and the U.S.’s technological prowess and capital are mutually complementary. A resilient energy future needs a long-term vision, not just the pursuit of short-term wins, a road map, and a resilient architecture of cooperation.
Arunabha Ghosh is the CEO of Council on Energy, Environment and Water (CEEW). The views expressed are personal
Published – May 08, 2025 12:16 am IST