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India and the US on Friday inked an initial pact on increasing private sector cooperation in the area of semiconductors under which the two countries would facilitate business opportunities and develop an ecosystem with a view to reduce their dependency on China and Taiwan.
The Memorandum of Understanding (MoU) on establishing semiconductor supply chain and innovation partnership under the framework of IndiaUS Commercial Dialogue was signed by US Secretary of Commerce Gina Raimondo and Commerce and Industry Minister Piyush Goyal during the Commercial Dialogue here.
According to a joint statement, both sides have agreed to set up a semiconductor sub-committee, led by the Department of Commerce for the US side and the Ministry of Electronics and Information Technology (MeitY) and Ministry of Commerce and Industry for the Indian side.
The committee will convene its first engagement in mid-year to review recommendations from the joint industry-led task force launched in connection with the iCET (Initiative on Critical and Emerging Technologies).
Raimondo, who was on a four-day visit to India, was accompanied by the chief executive officers of 10 US companies. She met several ministers besides holding meetings with Goyal.
The MoU seeks to establish a collaborative mechanism between the two governments on semiconductor supply chain resiliency and diversification in view of US's CHIPS and Science Act and India's Semiconductor Mission.
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The CHIPS and Science Act was signed by President Joe Biden in 2022 to boost funding for the American semiconductor industry.
The MoU aims to leverage complementary strengths of both countries and facilitate commercial opportunities and development of semiconductor innovation ecosystems through discussions on various aspects of semiconductor value chain.
It also envisages mutually beneficial R&D, talent and skill development.
Addressing a joint media briefing, Goyal said the MoU would help in expanding mutual cooperation and enhancing resilient supply chains.
Raimondo said that India's desire to expand its advance manufacturing is totally aligned with the US desire and goal to make their supply chain more resilient.
With the MoU, she said the US would like to see India achieve its aspirations to play a larger role in the electronic supply chain.
"We have already begun action as against that MoU (by) tasking both Indian and the American semiconductor industries to prepare an assessment of... gaps and lack of resiliency in the supply chain and that will guide our work," she said.
Raimondo said that besides semiconductors, there are opportunities to increase cooperation in areas like all kinds of hardware in the electronics supply chain.
"We also want to be clear that the US does not seek to decouple from China nor it seeks the technological decoupling from China.
"What we seek to do is ensure that certain technologies where the US is ahead and where Chinese explicit strategy is to have these technologies and deploy them in Chinese military apparatus, those are the technologies that we have used export controls to ban the sale to China," she told reporters here.
She also said that majority of the trade with China is in benign products and that will and should continue.
"So this is not about decoupling, what it is about is keeping eyes wide open to the fact that China is explicitly trying to get access to American technology for use in its military and we need to protect ourselves and our allies and partners from that happening," she said.
According to reports, China has sanctioned USD 140 billion to boost domestic chip manufacturing to overcome the US export restrictions.
Indian government has also approved a Rs 76,000 crore-scheme to boost semiconductor and display manufacturing in the country in a bid to position India as a global hub for hi-tech production and attract large chip makers.
Incentives have been lined up for companies engaged in silicon semiconductor fabs, display fabs, compound semiconductors, silicon photonics, sensor fabs, semiconductor packaging and semiconductor design.
Another key outcome of the commercial dialogue was the launch of a new working group on talent, innovation and inclusive growth.
Goyal said that both countries have recognised that small businesses and entrepreneurs are the lifeblood of the US and Indian economies. There is a need to facilitate collaboration between the SMEs and to foster innovation ecosystems that facilitate their post-pandemic economic recovery and growth, he added.
They also launched standards and conformance cooperation program (Phase III) to be carried out in partnership between ANSI (American National Standard Institute) and BIS (Bureau of Indian Standards).
Besides, the two leaders re-launched the travel and tourism working group to continue the progress from before the pandemic and to also address the many new challenges and opportunities to create a stronger travel and tourism sector.
The US side would send a senior government official-led clean energy and environmental technology business development mission to India in 2024.
The trade mission would be an opportunity to further foster US-Indian business partnerships in grid modernisation and smart grid solutions, renewable energy, energy storage, hydrogen, liquified natural gas, and environmental technology solutions.
Further, both sides pledged to work together in the Global Biofuels Alliance and in the development and deployment of hydrogen technologies.
"Both sides expressed interest in working together in developing next generation standards in telecommunications, including 6G," it said.
After the pandemic, several sectors, including automobile and telecom, were severely impacted on account of shortage of semiconductor chips as India mainly imports them from China and Taiwan.
Semiconductors are silicon chips that are used in various products, including automobiles, computers and cellphones.
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