The import factor

“It’s probably closer to well above 90 per cent in India’s case in terms of imports of rare earths — not just rare earths but also critical minerals more broadly," Jeffrey D Bean, a technology policy fellow at the Observer Research Foundation (ORF) in the US said.

“If every country around the world recognises Chinese dominance, particularly in the refining and processing of critical minerals and rare earths, and everybody sets out to do the same thing, we’re probably all going to end up at the same place, which is unsuccessful,” he added.

Last year, India’s fast-growing electric vehicle (EV) sector, which is already heavily dependent on imported EV batteries and magnets from China, was faced with production delays and a potential supply crunch. In May 2025, China’s magnet exports to India fell to their lowest in five years.

India has the world’s third-largest rare earth reserves, but it lacks the refining capability to use them. China dominates processing, with roughly 90 per cent of global capacity. This meant that India’s industrial growth depended entirely on China’s willingness to supply the materials it could not produce domestically.

China resumed rare earth magnet exports to India but imposed a condition that Indian firms had to provide end-user certificates guaranteeing that the materials would not be re-exported to the US. Indian companies complied. It was a demand that India participate in China’s strategy.

A truce between the US and China at a summit in Busan, South Korea in late October finally ended the suspension.

It was in this context that Pax Silica was founded in December 2025 with seven founding members: the US, Japan, South Korea, Australia, the United Kingdom, Singapore and Israel. Qatar, the United Arab Emirates and Greece followed in January, and India in February.

“Pax Silica is like a platform of coordination among governments, companies, investors, and supply chains. It’s like a loose framework that organises different parts of the artificial intelligence (AI) stack, from minerals to semiconductors, etc,” Syed Akbaruddin, a former Indian diplomat and permanent representative to the United Nations, told the Blueprint.

“We (India) are looking to build a secure semiconductor economy, and this can’t be done through domestic efforts. You need to have collaborations and cooperation with other organisations or countries,” he added.

Ten months on, the launch-day enthusiasm has yet to materialise for the Pax Silica Fund, which was widely predicted as worth a trillion dollars. Actual commitments go as far as $250 million. Beyond that, there’s a port-logistics pilot in Panama, a workforce-training tie-up with Stanford, and a proposed AI hub in the Philippines.

“There haven’t been any concrete companies that have come forward and said, yes, we’re putting our names behind this,” said Bean.

“I’m cheering for it, but I’m also very sceptical because, yes, it addresses clear areas of US need, and it addresses areas of allies’ and partners’ needs. But are there enough tangible initiatives in place to ultimately allow this to extend beyond the Trump administration? I’m not super-convinced,” he added.

India stands to gain a lot from Pax Silica, given what it can pitch. On critical minerals, India’s case is the strongest, and the clearest way Pax Silica could help is not through mining but through refining and transferring the technology to process ore into usable material, the capital-heavy, unglamorous work that the United States itself has mostly stepped away from doing at home. “I think it can provide a platform, if the US government chooses to use it, to allow a greater technology transfer to India for mining certain minerals,” Bean said.

“As of today, there has not been any fund allocation to India or to provide projects to India,” Akbaruddin said. “But the hope is that when the projects become visible, India will also bid and try and get some of the funds.” But it’s an area where India has the least room to wait. 

On semiconductors, the picture isn’t much better. India’s chip mission has so far produced mostly legacy manufacturing and backend packaging work, and American companies have largely stayed away. Micron’s assembly plant in Gujarat is an exception.

On July 15, the union government approved the Semiconductor Mission 2.0, a ₹1.27-trillion push aimed at incentivising companies for chip design, equipment and materials manufacturing, not just fabs and packaging.

It’s a statement of intent, if not yet capability. Assembly and testing, not fabrication or advanced design, is where Bean expects “India is going to make the most hay.”

India’s modest role places it below Taiwan and the US in fabrication and design, below China in legacy manufacturing, and even below the Philippines on the lower-end assembly work that looks like India’s best opening today.

“It is just getting started and playing catch-up,” Akhil Ramesh, chief research and development officer at the Pacific Forum, a Hawaii based foreign policy research institute, said.

“If India’s primary contribution is to serve as a hub for data centres, it could generate significant investment but relatively few jobs, while imposing substantial environmental and energy costs,” he added.

While Pax silica offers diversification of supply chains and reduces the stranglehold of a single supplier. It is also a pact that has clear geopolitical undertones, for a country that has long prioritised strategic autonomy that presents a dilemma.

India’s economy already leans heavily on US based supply chains, deepening this reliance could have strategic pitfalls.

“There is not going to be a goal of shifting from China to the US; that’s not an Indian goal,” Akbaruddin said. Whether India can balance its autonomy without aligning completely with the US strategic interests under this agreement is a question for the future.

For now, as Ramesh puts it, “Pax Silica has immense potential to transform semiconductor and critical mineral supply chains, but at this point, it remains largely potential rather than transformation.”