NEW DELHI—India’s minister of external affairs, Subrahmanyam Jaishankar, visited the United States this past week, meeting with Commerce Secretary Gina Raimondo to discuss a deepening partnership between the two countries, particularly in the technology sector, with special emphasis on semiconductors.
The meeting occurred a little over a week after the United States and India announced a partnership to build a semiconductor manufacturing plant in India.
Experts say the collaboration looks to bolster national security for both nations, particularly in light of supply chain threats sparked by Chinese aggression toward Taiwan.
The Sept. 30 meeting was part of Jaishankar’s first visit to the United States since Prime Minister Narendra Modi took office for a third term in June.
India and the United States announced during Modi’s Sept. 21–23 visit to the United States that they intended to collaborate on establishing a semiconductor manufacturing plant in India. The two countries called the plan “a watershed arrangement.”
The new plant aims to promote national security for both nations and will receive the support of the India Semiconductor Mission and a technology partnership between the U.S. Space Force and two Indian start-ups, 3rdiTech and Bharat Semi.
Countering Global Supply Chain Disruption
Analysts told the Epoch Times that the U.S.–India collaboration aims to counter future disruption of the global semiconductor supply chain due to Chinese geopolitical aggression—an issue that has direct national security implications for both nations.The plant will “hedge the risk” to the semiconductor manufacturing sector in the region in the “unlikely event of China–Taiwan war,” according to public policy expert Pooran Chandra Pandey.
Pandey serves as an adviser on international relations and strategic affairs to think tanks in Asia, Africa, and Europe. He has chaired policy committees for governments, U.N. agencies, and private sector organizations and nonprofits.
He believes that the United States is moving proactively to control any emergency that may arise in the event that China invades Taiwan. A tense geopolitical situation “may not ease soon,” he said, “potentially creating a massive supply chain disruption.” That disruption could dwarf the disruptions that occurred during the COVID-19 pandemic, he said.
Pandey said that the United States wants to ensure that it can quickly relocate the functional part of the Taiwanese semiconductor industry to a secure location. That will allow it to stabilize supply chains, while protecting the skilled Taiwanese workforce from a harmful potential blockade of Taiwan.
Aparna Pande, director of the India Initiative at the Washington-based Hudson Institute, told The Epoch Times that the U.S.–India semiconductor deal extends the collaborative framework established between the two countries in May 2022.
The U.S.–India Initiative on Critical and Emerging Technology (iCET) involves collaborations in the fields of artificial intelligence, quantum computing, semiconductors, and wireless telecommunication.
The inaugural iCET meeting was led by the national security advisers of both countries in January 2023 in Washington. The White House said in a statement that the United States and India were “committed to fostering an open, accessible, and secure technology ecosystem, based on mutual trust and confidence, that will reinforce our democratic values and democratic institutions.”
Accelerating Innovation, Scaling Production Capacity
Cybersecurity expert and geopolitical analyst Nishakant Ojha told The Epoch Times that the U.S.–India semiconductor deal should be viewed in the context of an agreement between the U.S. Department of Commerce and Polar Semiconductor that was announced Sept. 24.A $123 million grant will allow Polar—based in Minnesota—to nearly double its U.S. production capacity of power and sensor chips.
The funds became available as part of the Biden administration’s $52.7 billion semiconductor manufacturing and research subsidy program, the CHIPS Act, which came into force three months after iCET.
Ojha said the investment will enable Polar to modernize and expand its U.S. production capacity and will create opportunities for American chip designers.
The challenge, he said, is in accelerating innovation while scaling production capacity. That is where collaboration with India comes in.
“As part of Washington’s strategy to reduce reliance on China for critical technologies, the U.S. aims to strengthen semiconductor partnerships with India and Taiwan,” Ojha said.
Competitive China, Aspirational India
The U.S.–India semiconductor deal is substantially geopolitical, according to analysts. It rests on two premises: U.S. competition with China, and the rise of what Modi calls “aspirational India.”Both these factors come with challenges.
The deal is a message from the United States to both India and China, Pande said.
It sends a message to India that “we will support your rise,” and a message to China that the United States will build up its partners in the technology and defense areas, “at a time when the U.S. is denying the same to China,” she said.
Pandey said that geopolitics underlies any developments—including partnerships, investments, and supply chain stabilization programs.
“China is the elephant in the room behind the U.S. move,” he said.
Although India is at a nascent stage in the semiconductor field, he said, its engineers and skilled IT workers have the technical competence needed for a quick turnaround, especially in the fabrication, assembly, and testing services involved in the semiconductor industry.
“With India having announced incentives for semiconductor investors, there is [a] rush of momentum from many semiconductor companies,” Pandey said. They are from countries from the United States, Taiwan, Israel, and the EU, in partnership with large Indian companies like Adani, Tata, L&T, and HCL, among others, he said.
Pandey cautioned that although the initial steps have been taken and partnerships have been forged, it will still take three to four years to create a “stable ecosystem.”
In addition, he said, chip making may take longer because it requires precision, highly technical skills, a talent pool, and an uninterrupted supply of water and power to support an efficient manufacturing process. The way in which India manages fabrication, assembly, and test centers can be well managed by India, he said.
All three experts emphasized that to grow its ecosystem to meet the demands of the developing global supply chain, India needs to work on improving its infrastructure to the requisite standards, including a consistent, constant supply of water and electricity.
Opportunity for Indian R&D
There are other factors that India needs to pay attention to, according to Ojha. Historically, India’s electronics manufacturing sector has faced challenges due to infrastructure, supply chain and logistics issues, and limited corporate R&D focus.The PLI scheme is available for large-scale electronic manufacturing in India and extends an incentive of 4 percent to 6 percent on incremental sales (over base year) of goods manufactured in India.
Cooperation between India and the United States in the semiconductor industry will have a positive ripple effect, Ojha said. Innovation will positively impact “multiple sectors, including logistics, construction, and technology.”
India’s burgeoning semiconductor partnership with the United States is potentially game-changing, he said.
The world’s most populous country, which currently imports all its semiconductors, “is projected to become a key player, aiming for its electronics market to grow from $24 billion to $100 billion by 2025.”
The global chip industry is highly competitive, with China and the United States dominating the market. Ojha predicted that India could become an electronics hub.
However, it would need to meet certain demands by 2025: developing a fully functional innovation ecosystem, establishing advanced research and development facilities, and continuing to attract high-end talent.
