Lithium_Wiki

As India seeks to invest more in manufacturing in sectors with national security implications and meet its climate goals by producing electric vehicles and other sustainable solutions, access to critical minerals has become vital to its foreign policy. These ambitions require securing diverse and reliable supplies of lithium, a vital resource for battery production and semiconductors. Afghanistan, whose significant lithium reserves could be key to India’s EV ambitions, can be a partner in this endeavor. As a primary competitor in extraction, China’s aggressive expansion in securing global lithium supplies increases the urgency for India to gain access to Afghanistan’s estimated $1 trillion in lithium reserves.

Under the Afghan Taliban regime, political instability and infrastructure problems complicate Indian access to these reserves. However, Indian involvement would be a strategic investment that could serve as a coercive function for the Taliban to improve the political and business climate in Afghanistan.

India’s lithium demand: Less dependence on Chinese supply chains

China currently controls about 60 percent of the world’s lithium processing capacity and has made significant investments in lithium mining projects in countries such as Chile and Australia. India’s lithium supply chain is also heavily dependent on imports from China. Given the hostile relationship between India and China, reliance on Chinese-controlled supply chains could lead to supply constraints and higher costs for India, especially in a crisis. Indian policy decisions in the wake of the 2020 Galwan Valley conflict with China suggest that Delhi is increasingly linking geopolitical tensions with economic repercussions, such as India’s ban on Chinese apps and restrictions on Chinese investment.

As India seeks to invest more in manufacturing in sectors with national security implications and meet its climate goals by producing electric vehicles and other sustainable solutions, access to essential minerals has become critical to the country’s foreign policy.

If India can gain access to Afghan lithium, New Delhi could reduce its dependence on China and secure an alternative lithium supply for India’s emerging EV industry and other strategic needs for critical minerals. India projects its annual demand for lithium carbonate will reach 56,000 metric tons by 2030 to support its EV ambitions. Lithium-ion batteries, essential for EVs, are also crucial in energy storage systems that support renewable energy integration and stabilize the power grid. Beyond EVs, lithium’s role extends to electronics, telecommunications and several industrial applications important to India’s economic growth or strategic ambitions.

Access to lithium is thus crucial to Indian interests, but is vulnerable to disruptions caused by geopolitical tensions, regional conflicts or trade restrictions. These factors highlight the importance for India to diversify its sources of supply and invest in domestic lithium mining and processing capabilities to ensure long-term energy security and technological advancement.

Why Afghanistan? India’s Motives

While securing an alternative supply of lithium would support India’s ambitious renewable energy goals, India’s primary interest in undertaking lithium mining in Afghanistan would be strategic. New Delhi has already spent billions of dollars in Afghanistan over the past two decades to ensure that it has leverage to secure its political and security interests in the country. However, China’s increasing encroachments into Afghanistan in recent years, particularly Beijing’s moves to gain an economic and strategic foothold in the country through its Belt and Road Initiative, have been a concern for India. Investing in Afghan lithium mining would be a way for New Delhi to avoid Kabul’s over-reliance on Beijing, particularly a potential debt trap situation, and to limit Chinese influence in the country. The move would also strengthen India’s geopolitical influence in the broader Central Asian region.

From the Taliban’s perspective, engaging India in lithium mining offers multiple benefits. Economically, it provides a much-needed source of revenue and investment, crucial for a country struggling with economic isolation and infrastructure challenges. By diversifying its economic partnerships beyond traditional allies like China, the Taliban can attract more international investment and expertise, potentially leading to broader economic development. Politically, forging ties with India, a major global player, could bolster the Taliban’s quest for international legitimacy. Partnering with a democratic country like India could help the Taliban present a more moderate image, which would promote a narrative of constructive engagement with the international community. The mutual benefits of economic gain and strategic influence thus provide the motivations for both India and the Taliban to consider a lithium mining partnership.

The international community is rightly reluctant to engage with the Taliban due to human rights violations and security concerns. However, a lack of engagement with the regime in Afghanistan only exacerbates the humanitarian crisis and accelerates economic collapse. Amid this reluctance, Indian-led economic development in Afghanistan’s mining sector could present an attractive opportunity. For Afghanistan, the shift in Indian policy could potentially improve Afghanistan’s economic situation and expand the scope of acceptable international engagement. For India, it is important to safeguard its economic and regional interests in Afghanistan, although the decision would likely come at the cost of condemnation from Western partners. Moreover, it would chart an independent diplomatic course that reaffirms India’s leadership in the global South. By pursuing such a strategy, India would continue its multialignment policy, differentiate its role from the West, and reinforce its commitment to a unique, balanced foreign policy with an emphasis on diverse global partnerships and regional stability.

Reforming Afghanistan’s political and business climate

Large-scale mining in Afghanistan would be challenging, require significant financial investment, and ultimately depend on Kabul’s long-term stability. However, New Delhi could use its involvement to force the Taliban to implement some much-needed reforms.

For Afghanistan, the shift in Indian policy has the potential to improve the country’s economic situation and expand the scope of accepted international involvement.

Delhi could use its involvement in Afghanistan’s mining sector as leverage to force the de facto Taliban government to increase transparency and enforce international standards in line with investor demands. Afghanistan is currently facing an economic crisis that the Taliban has been unable to resolve or improve its business environment and attract investment. The security situation, human rights concerns and political instability have increased the risk of investing in Afghanistan. The Taliban would thus benefit from India’s support to signal to other investors that Kabul is a worthy financial partner.

India can improve the human rights situation in Afghanistan while pursuing its economic goals by including clauses in agreements that encourage more inclusive practices and support for local NGOs. This includes ensuring transparency in government operations, budgeting and procurement processes. Such reforms would result in less corruption and better operations overall, increasing investor confidence in the Afghan economy. The partnership could lay the foundation for future international investments in infrastructure, education and local businesses, thereby promoting long-term growth in Afghanistan.

To effectively navigate this challenging environment in pursuing its interests, India may need to shift from its current cautious approach to a more proactive engagement with the Taliban. New Delhi should adopt a multifaceted approach that includes robust diplomatic dialogue with all stakeholders, including the Taliban, to ensure that economic interests are pursued without compromising broader strategic objectives or ethical commitments. Prioritizing transparency and accountability in its economic investments will be crucial for India to ensure its alignment with international norms and values. By carefully managing these strategic priorities and ethical commitments, India can maintain a coherent foreign policy while advancing its interests in Afghanistan.

Also read: Mapping Afghanistan’s economic future: recommendations for reform.

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Image 1: Lithium mine via Wikimedia Commons.

Image 2: Prime Minister Narendra Modi via Flickr.