India, US to ink chip collaboration pact
2 min read . Updated: 10 Mar 2023, 01:29 AM IST
PremiumIndia and the US are seeking to collaborate on semiconductor policies to address supply chain challenges
New Delhi: India and the US are set to sign an accord on semiconductor cooperation, US commerce secretary Gina Raimondo told reporters on Wednesday, adding the two countries had held a dialogue about coordinating semiconductor incentive schemes to prevent a subsidy race and glut in the supply of this vital technology.
Under the memorandum of understanding (MoU), the two countries will share information about commercial prospects in the semiconductor ecosystem and commit to sustaining a discussion to encourage private sector investments. The agreement will also encompass supply chain mapping, technology joint ventures, the development of skills, and research and development partnerships. “We are looking for near-term commercial opportunities, but also, we’re looking here for a longer term strategic opportunity because this isn’t a one-year collaboration. We think this is a 5, 10, 20-year collaboration between the US semiconductor industry and India," Raimondo said.
India and the US are seeking to collaborate on semiconductor policies to address supply chain challenges and cut reliance on China. Both countries are separately aiming to spur private sector investments in the critical semiconductor industry, with India launching a $10 billion incentive scheme to lure large investments in chip manufacturing as it tries to build capacity locally.
“The discussions we’ve had are around providing transparency in our incentives and coordinating and collaborating on how we administer our semiconductor initiatives. We are working to prevent over-subsidizing certain areas or subsidizing such that there’s a glut of certain kinds of chips," she said.
“This is also a huge opportunity, at the get-go here, to share information, coordinate our implementation, map the supply chain together and come up with alignment around our senses of demand for semiconductors and whether more supplies are needed. We basically feel that we can have a greater benefit for both of our countries if we collaborate in the implementation of our chips programs," she went on to add.
Raimondo outlined America’s desire to work closely with partners like India to reduce supply chain vulnerabilities. Speaking at an event earlier on Tuesday, she pointed out that the US had become overly dependent on certain sources of supply for semiconductors like Taiwan. Diversifying supply chains will be a key focus for American firms looking to invest in India.
However, Raimondo also acknowledged that there are presently no investment proposals from American firms in the Indian market.
She also pointed out that high tariffs on certain input components for semiconductors remain a challenge for US businesses in India. Besides this, navigating regulatory differences between central and state regulations is also a challenge. Semiconductor cooperation has captured the imagination of policymakers in New Delhi and Washington. Raimondo’s announcements on semiconductors come mere months after both countries unveiled the Initiative on Critical and Emerging Technologies. This programme, which will be driven largely by the national security elite in both countries, will seek the cooperation of vital new technologies like 5G, 6G and semiconductors, among others.