India, US ink pact in semiconductor sector

Category
International Relations
Published
17th Mar, 2023

Context

ndia and the United States signed a Memorandum of Understanding (MoU) to create a semiconductor sub-committee under the Commercial Dialogue between the U.S. Department of Commerce and India’s Ministry of Electronics and Information Technology (MeitY) and the Ministry of Commerce.

Initiative on Critical and Emerging Technologies (iCET):

Launched in: 2022
The Initiative for Critical and Emerging Technologies (iCET) is an inter-governmental initiative between the United States and India.
Objective: to elevate and expand strategic technology partnership and defence industrial cooperation between the country’s governments, businesses and academic institutions.

About the semiconductor sub-committee:

The semiconductor sub-committee would be led by the;
- Department of Commerce for the US side
- Ministry of Electronics and Information Technology (MeitY) and Ministry of Commerce and Industry for the Indian side
The committee will convene its first engagement in mid-year to review recommendations from the joint industry-led task force launched in connection with the iCET (Initiative on Critical and Emerging Technologies).

Need of the move:

Objective: Its objective is to reduce their dependency on China and Taiwan.

China-Taiwan’s dominance & tussle:

Taiwan is home to some of the world’s leading semiconductor manufacturers.
China, as the world’s largest market for semiconductor products.
According to reports, China has sanctioned USD 140 billion to boost domestic chip manufacturing to overcome the US export restrictions.
However, the China-Taiwan semiconductor war has started which has significant implications for the global tech industry.
China claims Taiwan to be part of its territory and has been looking for "reunification". The relations between the two countries appear to have deteriorated sharply.

Important missions in India & US to promote semiconductor industry

US's CHIPS and Science Act: The CHIPS and Science Act was signed by President Joe Biden in 2022 to boost funding for the American semiconductor industry.
India's Semiconductor Mission: The programme aims to provide financial support to companies investing in semiconductors, display manufacturing and design ecosystem.

Indian government has also approved an 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.
Incentives have been lined up for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensor fabs, and semiconductor packaging and semiconductor design.

Budget 2023:

The semiconductor development programme of the government has been given a budget estimate of Rs 3,000 crore from the Rs.200 crore in the revised estimate last year. PLI scheme for large scale electronic manufacturing also received a whopping over Rs.4, 000 crore estimates.