Friday, 17 May, 2024
By: Yash Gupte
India’s ambition to become the global leader for semiconductors was first felt during the COVID-19 global pandemic when lockdowns and restrictions globally resulted in a shortage of semiconductor chips. Image Source: IANS
The Department of Commerce for the US and the Ministry of Electronics and Information Technology (MeitY) and Ministry of Trade and Industry for India will lead the semiconductor subcommittee that the two sides have decided to establish, according to a joint statement.
A Memorandum of Understanding (MoU) on establishing semiconductor supply chain and innovation partnership under the framework of India – US Commercial Dialogue was signed between the two countries following the Commercial Dialogue 2023 held in New Delhi on March 10, 2023. United States Secretary of Commerce Gina Raimondo was on an official visit to New Delhi from March 7 to March 10 to participate in the US-India commercial dialogue and CEO Forum and to meet with public and private sector leaders. After a three-year hiatus, India and the US hosted a commercial dialogue on March 10 to discuss collaboration in a variety of areas that might open up new trade and investment prospects between the two nations.
In November 2022, Raimondo and Piyush Goyal, the commerce minister, soft-launched the US-India CEO Forum. Increased supply chain resilience, improved energy security, a reduction in global greenhouse gas emissions, the advancement of inclusive digital trade, and facilitating post-pandemic economic recovery, particularly for small businesses, were among the top priorities they identified during their meeting. “This is an optimistic time for US-India relations, and I am excited to visit India during such a special time of year, the celebration of Holi,” said Raimondo.
The Department of Commerce for the US and the Ministry of Electronics and Information Technology (MeitY) and Ministry of Trade and Industry for India will lead the semiconductor subcommittee that the two sides have decided to establish, according to a joint statement. Midway through the year, the committee will meet for the first time to discuss the proposals from the joint industry-led task force that was established in connection with the iCET (Initiative on Critical and Emerging Technologies).
In light of the US CHIPS and Science Act and India's Semiconductor Mission, the Agreement aims to create a collaboration mechanism between the two governments on supply chain resiliency and diversification for semiconductors. The CHIPS and Science Act was signed by President Joe Biden in 2022 to boost funding for the American semiconductor industry.
India’s ambition to become the global leader for semiconductors was first felt during the COVID-19 global pandemic when lockdowns and restrictions globally resulted in a shortage of semiconductor chips which are used in a range of consumer electronic products such as mobile phones, laptops and cars. To accelerate its plans, the government announced a $10 billion incentive PLI programme for semiconductor and display manufacturers in December last year.
In 2020, India imported 2.38 billion dollars of semiconductors, becoming the 13th largest importer of Semiconductor Devices in the world with over 68 percent of it from China. Imports increased 65 percent in 2021-22 from 2019-20, as per data from the commerce and industry ministry. Only 9 percent of India’s semiconductor requirements were sourced locally in 2021, according to a report by the industry body Indian Electronic and Semiconductors Association (IESA).
The semiconductor industry forms an essential part of all electronic items. India presently accounts for 3 percent of global electronics production and is quickly expanding and boosting its manufacturing cluster. India is a centre for semiconductor design and development, but it lags behind in the manufacturing of domestic chips. The Tata Group intends to invest US$90 billion (about Rs7,452 billion) in the semiconductor industry across the group companies over the next five years. Also, Indian government has approved Rs 76,000 crore-scheme to boost semiconductor and display manufacturing in the country in a bid to position India as a global hub for hi-tech production and attract large chip makers.
The US and China are giants in chip manufacturing. So, the agreement between India and the US to increase collaboration in the semiconductor industry to allow business possibilities and the growth of innovation ecosystems is expected to be of great assistance to India. Raimondo said that India's desire to expand its advance manufacturing is totally aligned with the US desire and goal to make their supply chain more resilient. With the MoU, she said the US would like to see India achieve its aspirations to play a larger role in the electronic supply chain. With continued assistance from the US and successful implementation of schemes by the government, India can emerge as a global hub for semiconductor manufacturing.
