During the India-US Commercial Dialogue held in March 2023, a Memorandum of Understanding (MoU) on the semiconductor supply chain and innovation partnership was signed by India and the US. What does this agreement entail? What is its significance for India? Read more in this article, this topic is important for the IAS exam international relations segment.
India-US MoU on Semiconductor Supply Chain
The MoU aims to create a mechanism for the two governments to work together on semiconductor supply chain resilience. In order to restructure its supply chains and manufacturing, the US presented the CHIPS and Science Act. India has started a production-linked incentive programme and the India Semiconductor Mission for semiconductors.
Significance for India:
- The US’s ninth-biggest trading partner is India, while the US is both India’s largest trading partner and its top export market.
- The US is one of India’s top five investment destinations and the third-largest source of foreign direct investment (FDI) for the country.
- It seeks to take advantage of the complementary characteristics of both nations, open up business prospects, and promote the growth of ecosystems for semiconductor innovation.
- The India-USA pact was signed as India works to reduce its reliance on China for chips.
- The Agreement aims to foster talent and skill development as well as research and development that is mutually beneficial.
Also read: Semiconductor Shortage – Reasons, Impact & Way Forward
- The India-USA Commercial Dialogue is an initiative that brings together frequent discussions between government officials and representatives of the private sector.
- It strives to maximize investment opportunities while facilitating trade in a variety of economic sectors.
- In February 2019, the most recent India-US Commercial Dialogue took place. Since then, it had been impossible to hold due to the epidemic and other circumstances.
Conclusion: Both the US and India are in a fortunate situation as they are starting to create distinct incentive programmes for the semiconductor industry. The two nations will be able to identify potential areas for joint ventures or technological partnerships, job training, and research and development collaborations by jointly mapping the supply chain.
India-US Agreement on Semiconductor Supply Chain:- Download PDF Here
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