India, US ink MoU on semiconductor supply chain, innovation partnership

India and the United States on Friday signed an agreement to establish a semiconductor supply chain that will help deepen India’s electronic manufacturing ecosystem and curtail China’s dominance in the sector.

India’s Commerce and Industry Minister Piyush Goyal and US Secretary of Commerce Gina Raimondo signed a memorandum of understanding (MoU) in this regard in New Delhi. The two countries have also signed an innovation partnership agreement under the framework of the India-US Commercial Dialogue.

“The United States would like to see India achieve its aspiration to play a larger role in the electronic supply chain. The MoU that we signed is designed to help achieve that goal,” US Secretary of Commerce Raimondo said at a media conference after signing of the agreement.

Raimondo further added, “We have already begun with action, tasking both Indian and American semiconductor industries to prepare an assessment where they have gaps and lack of resiliency in the supply chain that will guide our work.”

Semiconductors play an increasingly important role in manufacturing a wide range of products including automobiles, consumer durables and electronic equipment. In the last couple of years, several industries have suffered due to the shortage of semiconductors.

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The agreement between the US and India is likely to ease the constraints in the supply chain of semiconductors between the two countries.

Semiconductor supply is critically important to achieving India’s target of boosting the size of the country’s electronics industry to $300 billion, as envisaged by Prime Minister Narendra Modi's government, from the current around $75 billion. In 2014, the size of India’s electronics industry stood at around $10 billion.

Addressing a joint media conference, Goyal said the agreement on establishing a semiconductor supply chain will help both India and the US in “expanding mutual cooperation and ultimately ensuring resilience in the supply of semiconductors.”

The 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, according to an official statement released by India’s ministry of commerce and industry.

“It aims to leverage complementary strengths of both countries and facilitate commercial opportunities and development of semiconductor innovation ecosystems through discussions on various aspects of the semiconductor value chain,” it said.