India Joins US-Led Supply Chain Alliance
India has joined the US-led Pax Silica alliance, a coalition aimed at bolstering supply chains for rare earth minerals, semiconductors, and AI. The partnership is intended to reduce dependency on China for these critical components. This move could enhance sourcing stability for global retail and beauty industries.
- The Pax Silica alliance was formally launched in December 2025, with initial signatories including the U.S., Japan, South Korea, the U.K., Australia, Singapore, Israel, Greece, Qatar, and the United Arab Emirates. - This coalition is a direct response to China's supply chain dominance; for example, China controls approximately 90% of the world's rare earth refining and processing and produces about 94% of the world's gallium, a critical mineral for advanced semiconductors. - As a backdrop to the alliance's formation, the U.S. implemented export controls on advanced semiconductor technology to China, while Beijing retaliated with its own export restrictions on key minerals essential for chip manufacturing. - While India has the world's third-largest reserves of rare earth minerals at 6.9 million tonnes, it currently contributes less than 1% of global production, highlighting a significant gap between potential and output. - To bolster its domestic capabilities, the Indian government has launched the India Semiconductor Mission, a $10 billion incentive program to attract investment from companies like Micron and Tata Group. - Despite this investment, India's semiconductor industry remains heavily reliant on foreign sources, importing over 90% of essential inputs such as high-purity silicon wafers and specialty gases. - India's domestic semiconductor market is projected to grow from about $40 billion in 2024 to over $100 billion by 2030, driven by demand for smartphones, automotive electronics, and data centers.
