US Commerce Secretary Gina Raimondo on Thursday stated India and the United States (US) had been working very ‘closely’ and would have formal discussions concerning cooperation on semiconductors.
The US desires to coordinate with its allies, together with India and Europe, so {that a} ‘subsidy race’ and ‘glut’ within the semiconductor house will be additionally averted sooner or later.
Amid the worldwide semiconductor chip disaster, nations are chalking out methods to construct resilient provide chains in order that they continue to be unaffected by disruptions similar to pandemic or geopolitical tensions. For occasion, final yr, the US signed the CHIPS Act to strengthen home semiconductor manufacturing. Similarly, in December 2021, India introduced a production-linked incentive (PLI) scheme for improvement of semiconductor and show manufacturing ecosystems.
Raimondo stated the world, together with the US, was overly dependent on Taiwan so far as semiconductors have been involved. “We’re not producing enough semiconductors and we’re getting them all from either just Taiwan or just packaged in Malaysia, and it exposes us to incredible disruption…93 per cent of the world’s most advanced semiconductors are produced in Taiwan. That isn’t, by any measure, is stable or resilient,” she stated at a hearth chat organised by Jesus and Mary College.
Raimondo is on a four-day go to to New Delhi until March 10 to improve commerce and industrial ties between each nations. The India-US Commercial Dialogue can be held on Friday after a three-year hiatus that can focus on provide chain resiliency and diversification and new rising areas.
The India-US CEO Forum may also happen on Friday with key precedence areas similar to growing provide chain resilience, enhancing vitality safety and decreasing general greenhouse gasoline emissions, advancing inclusive digital commerce, and facilitating post-pandemic financial restoration, particularly for small companies.
There are additionally synergies between each nations on semiconductor design and know-how. “How do we purposefully strategise and plan? For example, India is home to a massive amount of semiconductor design talent. The US leads the world in semiconductor design, we have synergy there. Having said that, you know, this semiconductor supply chain is incredibly complex from rare earth, critical minerals, chemicals, silicon, and actual manufacturing,” Raimondo stated.
One of the challenges, she identified, was India nonetheless had fairly excessive tariffs on sure elements that go into semiconductors or different electronics, making manufacturing tough.
FTA and IPEF
Raimondo stated a commerce deal with India was off the desk and the Indo-Pacific Economic Framework (IPEF) can be extra economically impactful than a free commerce settlement (FTA).
“The US Congress has said there is no political appetite for FTA with India…My call is that IPEF may prove to be in many ways more economically impactful than FTA. FTA for the past 50 years has been an economic arrangement between two countries,” she stated, including that IPEF can be a contemporary equal of an FTA.
“If we figure it right, it will…that will unleash more job creation in both the countries. We will see a big supply chain, job creation, private investments,” she stated.
Raimondo stated the US was transferring with the IPEF at an ‘unprecedented pace’ and was hopeful of concluding agreements on all 4 pillars of IPEF by the top of the yr.
As many as 14 nations, together with India and the US, are members of the IPEF that was launched collectively by the US and different companion nations of the Indo-Pacific area on the sidelines of the Quad Summit in Tokyo in May final yr. It is seen as an financial initiative to counter China’s affect within the South and Southeast Asian nations.
IPEF has 4 pillars — commerce, provide chains, tax and anti-corruption, and clear vitality. Thirteen of 14 member-nations of IPEF have determined to be part of the three pillars, barring India as broad consensus had not emerged on points pertaining to labour, surroundings, digital commerce, and public procurement.