NEW DELHI--India has agreed in principle to supply Japan with roughly 15 percent of its annual rare earth needs.
The materials are crucial to the production of sophisticated electronic products.
A delegation led by industry minister Yukio Edano reached agreement with the Indian government on April 30.
India is expected to start exporting rare earths as early as August.
Based on the agreement, Japanese trading house Toyota Tsusho Corp. and Indian Rare Earths Ltd. will join hands to produce about 4,000 tons of rare earth elements for Japan.
Japan needs about 27,000 tons of rare earth minerals annually.
India has deposits equivalent to at least 15 years, according to government officials.
Toyota Tsusho has already begun construction of a plant for the project in the southern state of Andhra Pradesh.
The two governments had earlier been at odds on the tonnage and percentage of benefit-sharing.
Under the project, rare earth minerals such as lanthanum, cerium and neodymium will be extracted from the process of refining uranium.
Japan has been looking for new suppliers of rare earths after China, which represents about 90 percent of the world supply, started restricting its exports in 2006.
Rare earth minerals are crucial to the production of hybrid and electric vehicles as well as an array of high-technology electronics products.
Meanwhile, Japan's foreign minister met Indian officials in New Delhi on April 30 to discuss increased political, security and economic cooperation between the two nations.
Koichiro Genba and Indian Foreign Minister S.M. Krishna led wide-ranging annual bilateral talks called the India-Japan Strategic Dialogue.
They discussed Japanese assistance for infrastructure development projects in India as well as civil nuclear cooperation, Krishna told reporters.
"Japan and India are important partners,'' Genba said, adding that they shared democratic values and strategic interests.
An Indian government statement said senior officials also met to discuss energy efficiency and conservation issues.
Later on April 30, the two sides were to hold their first regular ministerial-level economic dialogue. Genba also planned to meet Prime Minister Manmohan Singh.
India has been the largest recipient of Japanese development aid for several years. Japanese involvement in Indian infrastructure development has been growing.
According to India's Commerce Ministry, trade between the two nations is likely to reach $25 billion by 2014. Bilateral trade totaled $13.8 billion in the fiscal year that ended March 31, 2011, up nearly $3.5 billion from a year earlier, according to the most recent available Indian data.
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