India officially joined Pax Silica, a strategic alliance of 12 countries including the US, Japan, South Korea, Australia, the United Kingdom, Singapore, Israel, Qatar, the United Arab Emirates, and Greece, in February 2026. According to reports from Business Standard, the partnership was founded in December 2025 as a platform for coordinating governments, companies, investors, and supply chains across the artificial intelligence stack, from minerals to semiconductors. Former Indian diplomat and permanent representative to the United Nations Syed Akbaruddin described it as a loose framework organising different parts of the AI stack.
India currently receives 80-90% of its rare earth magnets and related materials from Chinese suppliers, creating urgent supply chain diversification needs. As reported by Business Standard, Jeffrey D Bean, a technology policy fellow at the Observer Research Foundation, noted that India's dependence extends beyond rare earths to critical minerals more broadly, with the country lacking refining capability despite having the world's third-largest rare earth reserves. The crisis deepened when China imposed export controls on seven rare earth elements in April 2025 in response to US tariffs, severely impacting India's electric vehicle sector and causing production delays and potential supply crunches.
The launch-day enthusiasm for the Pax Silica Fund, widely predicted as worth a trillion dollars, has yet to materialise with actual commitments reaching only $250 million. According to Business Standard, the fund has produced limited concrete initiatives including a port-logistics pilot in Panama, a workforce-training tie-up with Stanford, and a proposed AI hub in the Philippines. Bean expressed skepticism about the fund's longevity beyond the Trump administration, noting that there haven't been any concrete companies committing to the initiative.
India's semiconductor sector faces significant challenges despite the ₹1.27-trillion Semiconductor Mission 2.0 approved on July 15, which aims to incentivise companies for chip design, equipment and materials manufacturing. As reported by Business Standard, India's chip mission has produced mostly legacy manufacturing and backend packaging work, with American companies largely staying away except for Micron's assembly plant in Gujarat. Akhil Ramesh, chief research and development officer at the Pacific Forum, noted that India is playing catch-up in fabrication and design, ranking below Taiwan and the US in fabrication and design, and below China in legacy manufacturing.
The Pax Silica partnership presents a strategic dilemma for India, which has long prioritised strategic autonomy. According to Business Standard, Akbaruddin emphasised that there is not going to be a goal of shifting from China to the US, stating that whether India can balance its autonomy without aligning completely with US strategic interests under this agreement remains a question for the future. Ramesh noted that while Pax Silica offers diversification of supply chains and reduces the stranglehold of a single supplier, it also has clear geopolitical undertones that could deepen India's reliance on US-based supply chains.
