Chip pact with US

From being a battle of corporate giants, the incredibly costly, complex and high-stakes business of making semiconductor chips has assumed the form of a geopolitical weapon. As governments respond to national security concerns brought out starkly by pandemic-era shortages and shifts in the global supply chain, India, too, has been paying more attention to ratchet up its nascent semiconductor industry with production-linked incentives. Last year, Foxconn, the Taiwanese firm that assembles Apple’s iPhones, and mining company Vedanta teamed up to build a chip-making facility in Gujarat. The memorandum of understanding with the US on information-sharing on the semiconductor policy, commercial avenues and innovation is a boost for India’s goal to have a larger role in the electronics supply chain. Leveraging complementary strengths would work to the advantage of both countries.

The Biden administration has been proactive in pursuing a policy shift to end the heavy reliance on China and Taiwan for critical technological components. Expanding cooperation in advanced weaponry, supercomputing, semiconductors and other high-tech fields with India could be a part of its plan of ‘friendshoring’ or shifting the manufacturing of certain critical components to friendly countries. It’s an opportunity not to be missed. New Delhi’s central focus has to be on powering growth through collaborative energy and strategic alliances. Going forward, that would mean asking the US to ease restrictions on transferring defence-related and cutting-edge technology.

India would be circumspect of the voices sounding a note of caution to avoid falling into a trap of entering restrictive economic trade blocs. These apprehensions could be a false alarm since many of the Indo-US technology partnerships would hinge on new connections in the private sector, and nothing more. The India-US Commercial Dialogue’s common goals include increasing supply chain resilience, enhancing energy security and reducing overall greenhouse gas emissions. Investment in emerging technology should be welcomed.