The India-US pact on semiconductor supply chain and innovation partnership, signed on Friday, will increase New Delhi’s role in the electronics supply chain and the two sides have already started acting on it, US Commerce Secretary Gina Raimondo has said.

“We see India as a trusted technology partner, and we want to deepen our technology partnership with the country. The US would like to see India achieve its aspirations to play a larger role in the electronics supply chain. And the MoU is designed to help achieve that goal,” Raimondo said at a joint press briefing with Commerce & Industry Minister Piyush Goyal following the US India Commerce Dialogue on Friday.

India and the US signed a number of other agreements in areas such as talent and innovation, travel & tourism, standards, launch of trade dialogue to enhance high technology commerce and clean energy.

Looking beyond China

The MoU on semiconductors, signed under the framework of India-US Commercial Dialogue, has come at a time when the US is seeking to move away from China, in the areas of critical technologies, and also reduce its dependence on Taiwan for advanced semiconductors.

“The US doesn’t seek to decouple with China,” Raimondo clarified. It wants to continue the vast majority of its trade with the county in benign products. But there were critical US technologies that China wanted to deploy in its military apparatus and Washington had placed export controls on these, she added.

The India-US MoU seeks to establish a collaborative mechanism between the two governments on semiconductor supply chain resiliency and diversification in view of the US’s CHIPS and Science Act, and India’s Semiconductor Mission. Both programmes provide incentives for production of semiconductors.

The MoU aims to leverage complementary strengths and facilitate commercial opportunities and development of semiconductor innovation ecosystems through discussions on various aspects of the semiconductor value chain, according to the Commerce & Industry Ministry.

“We have already begun action as against that MoU (by) tasking both Indian and the American semiconductor industries to prepare an assessment of... gaps and lack of resiliency in the supply chain and that will guide our work,” she said.

The global semiconductor foundry market size was valued at $101.6 billion in 2022 and is projected to reach $182.9 billion by 2030. Taiwanese companies, led by TSMC, account for over 60 per cent of the market share of the global foundry market (factories contracted to make chips designed in other countries). China accounts for 8.5 per cent of the global foundry market

Raimondo visited New Delhi on the invitation of Goyal to participate in the India-US bilateral Commercial Dialogue 2023. She led a high-level business delegation of US CEOs for the India-US CEO Forum.

“The Minister and the Secretary noted with satisfaction that the bilateral goods and services trade has almost doubled since 2014, exceeding $191 billion in 2022, signalling accelerated growth benefitting both countries. With the US becoming India’s largest trading partner in 2022, both sides will take further steps to enhance their commercial collaboration and tap into market potential across multiple sectors,” per a joint statement issued after the meeting.

New working group

Both sides announced the launch of a new Working Group on `Talent, Innovation and Inclusive Growth’ under the Commercial Dialogue to further the co-operation on start-ups, SMEs, skill development and entrepreneurship including in digital and emergent technologies.

The countries also re-launched the ‘Travel and Tourism’ Working Group to continue the progress from before the pandemic and to also address new challenges.

A Standards and Conformance Co-operation Program  (Phase III) was also launched which would be carried out in partnership between the American National Standard Institute and the BIS to further cooperation in standards.

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