India, Uzbekistan could explore FTA, says Piyush Goyal; Uzbekistan invites Indian investment in mining, rare earths
India and Uzbekistan discussed exploring a free trade agreement (FTA) at an India-Uzbekistan Business Forum, with bilateral trade currently targeted to reach around USD 2 billion in the near term.
Uzbekistan invited Indian investment in its mining and metallurgy sector, citing large reserves of gold, copper, uranium, and critical minerals including rare earth elements.
The two sides identified information technology, a skilled workforce, and cotton production as complementary areas where each country holds distinct strengths.
The discussion is being read as part of India's broader push to diversify critical mineral and rare earth sourcing away from concentrated supply chains.
Types of Trade Agreements — FTA vs CEPA vs PTA
An FTA (Free Trade Agreement) removes or reduces tariffs on a substantial part of trade between two or more countries, generally covering goods alone. A CEPA (Comprehensive Economic Partnership Agreement) is broader, covering goods, services, investment, and regulatory cooperation. A PTA (Preferential Trade Agreement) offers tariff concessions on a limited, negotiated list of items rather than near-universal coverage.
Key Details
- India currently has FTAs/CEPAs in force with ASEAN (10 countries), South Korea, Japan, Mauritius (CECPA), UAE (CEPA, in force since May 2022), Australia (ECTA), and the EFTA bloc (Switzerland, Norway, Iceland, Liechtenstein).
- The India-UAE CEPA is often cited as a benchmark: bilateral merchandise trade nearly doubled from about USD 43 billion to over USD 100 billion within three years of implementation.
- India signed a CEPA with Oman in December 2025, giving nearly 98% of Indian exports duty-free access to the Omani market.
- Negotiating authority for trade agreements rests with the Ministry of Commerce and Industry (Department of Commerce), under the overall trade policy framework of the Foreign Trade Policy.
An India-Uzbekistan arrangement being discussed would most plausibly begin as a narrower PTA or sector-specific pact before any comprehensive FTA/CEPA, following the same graduated pattern India has used with other partners.
Critical Minerals and Rare Earth Elements — Strategic Significance
Rare earth elements (a group of 17 elements including neodymium and dysprosium) are essential inputs for permanent magnets used in electric vehicle motors, wind turbine generators, electronics, and defence systems. Supply chains for both mining and, especially, processing/refining of rare earths are heavily concentrated in one country, creating a strategic vulnerability for import-dependent economies including India.
Key Details
- India holds the world's fifth-largest rare earth reserves but depends on a single dominant supplier for roughly 80-90% of finished magnets, since that supplier controls close to 90% of global rare earth separation/processing capacity and over 90% of magnet manufacturing.
- India launched the National Critical Minerals Mission (2024-25 to 2030-31) to secure supply chains for critical minerals and rare earths.
- A Production Linked Incentive (PLI) scheme worth roughly Rs 7,280 crore has been approved for rare earth permanent magnet manufacturing in India.
- The Mines and Minerals (Development and Regulation) Amendment Act, 2023 introduced a new category of "critical and strategic minerals" and enabled auctioning of exploration licences for them.
Uzbekistan's invitation to Indian firms to invest in its mining sector (gold, copper, uranium, rare earths) fits directly into India's strategy of diversifying critical mineral sourcing to reduce reliance on a single supplier chain.
International North-South Transport Corridor (INSTC) — Central Asia Connectivity
The INSTC is a 7,200-km multi-modal (road, rail, sea) transport network agreed in 2000 between India, Russia, and Iran, designed to cut freight time and cost between India, Iran, Central Asia, Russia, and Europe compared to the traditional Suez Canal route.
Key Details
- The corridor's "Eastern corridor" alignment runs via Iran's Chabahar Port through Afghanistan/Central Asian routes toward Uzbekistan and onward to Kazakhstan and Russia, giving India a Pakistan-bypassing route to landlocked Central Asia.
- Uzbekistan and Kazakhstan, both landlocked, view Chabahar as their gateway to the Indian Ocean Region.
- India has invested in upgrading Chabahar's Shahid Beheshti terminal under a long-term operating contract with Iran.
- India-Central Asia engagement also runs through the India-Central Asia Summit format and the Ashgabat Agreement (a separate multimodal transport pact India joined in 2018).
Deeper trade and investment ties with Uzbekistan depend on functioning connectivity infrastructure; INSTC/Chabahar is the logistical backbone that would carry any expanded India-Uzbekistan trade, since the two countries do not share a land or direct sea border.
- Bilateral trade target discussed: around USD 2 billion in the near term (from a much lower current base).
- India's FTAs in force cover 19 countries across 7 agreements (ASEAN-10, South Korea, Japan, Mauritius, UAE, Australia, EFTA-4) as of 2026.
- India-UAE CEPA trade growth: from ~USD 43 billion to over USD 100 billion in three years.
- Global rare earth processing concentration: one country accounts for roughly 90% of separation/processing and over 90% of magnet manufacturing capacity.
- Rare Earth Magnet PLI outlay: approximately Rs 7,280 crore.
- INSTC corridor length: approximately 7,200 km, established 2000 by India, Russia, and Iran.