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India and US Forge New Semiconductor Partnership to Strengthen Global Supply Chain

By99notes

(Source: Indian Express; Section: Cover Page; Page: 01)

Topic: GS2 – International Relations

GS3 – Indian Economy
Context:
  • The article covers the US and India’s new semiconductor partnership, announced ahead of Prime Minister Modi’s visit to the US, aimed at enhancing the global semiconductor supply chain and infrastructure.

 Analysis of News:     

India-US Semiconductor Partnership

  • Ahead of Prime Minister Modi’s expected visit to the US, Washington announced a new partnership with India to explore opportunities in the semiconductor supply chain.
  • This collaboration will involve a comprehensive assessment of India’s current semiconductor ecosystem, regulatory framework, workforce, and infrastructure needs.
  • This groundwork will pave the way for future joint initiatives to strengthen the sector.

Purpose and Scope of the Partnership

  • The US Department of State will collaborate with the India Semiconductor Mission to enhance and diversify the global semiconductor ecosystem.
  • The initial phase involves engaging Indian stakeholders like state governments, educational institutions, and private companies to identify areas of improvement.
  • The partnership aims to create a resilient and secure global semiconductor value chain, addressing the demands of global digital transformation.

Alignment with the CHIPS Act

  • This initiative aligns with the CHIPS Act of 2022, signed by US President Joe Biden, which seeks to boost domestic semiconductor manufacturing and research.
  • The act also created the International Technology Security and Innovation (ITSI) Fund, with $500 million allocated to promote secure semiconductor supply chains and trusted telecom technologies in collaboration with global allies, including India.

Potential Impact

  • The partnership underscores the strategic importance of semiconductors in manufacturing essential products such as vehicles and medical devices.
  • By strengthening India’s semiconductor industry, both nations aim to benefit from a more robust supply chain, ensuring global competitiveness and security in the technology sector.
Where does India Stand in the Semiconductor Market?
  • India currently imports all chips and the market is estimated to touch USD 100 billion by 2025 from USD 24 billion now. However, for the domestic manufacturing of semiconductor chips, India has recently launched several initiatives:
  • The Union Cabinet has allocated an amount of Rs 76,000 crore in 2021 for supporting the development of a ‘semiconductors and display manufacturing ecosystem’.
  • Consequently, a significant number of incentives would be provided to design companies to design chips.
  • India has also launched the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) for manufacturing of electronics components and semiconductors.
  • In 2021, India announced its roughly USD 10 billion-dollar Production-Linked Incentive (PLI) scheme to encourage semiconductor and display manufacturing in the country.
  • In 2021, the MeitY also launched the Design Linked Incentive (DLI) Scheme to nurture at least 20 domestic companies involved in semiconductor design and facilitate them to achieve a turnover of more than Rs.1500 Crore in the next 5 years.
  • India’s own consumption of semiconductors is expected to cross USD 80 billion by 2026 and to USD 110 billion by 2030.
Practice Question:  Analyze the significance of the new semiconductor partnership between India and the US. How might this collaboration impact both nations’ semiconductor industries and their broader technological strategies? (250 words/15 m)
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