India and EU Forge New Deal on Semiconductors: Strengthening Strategic Technology Ties

India EU sign semiconductor pact

Recently, India and the European Union (EU) signed a Memorandum of Understanding (MoU) to enhance cooperation in the semiconductor ecosystem with the goal to facilitate investments, joint ventures, and technology partnerships, including manufacturing facilities.

In this article, the UCN Team provides a detailed analysis, presenting key concepts and insights on the news.

Strategic Importance: Semiconductors are vital components that drive innovation in key areas like telecommunications, electronics, automotive, and more. They enable technological progress in strategic fields such as artificial intelligence and internet of things. However, the current supply chains are heavily reliant on few dominant players like China. This underscores the need for more resilient and diversified supply chains for semiconductors.

Building robust semiconductor supply chains has become even more critical in the post-COVID period, with many countries looking to reduce dependence on China. The India-EU agreement aims to promote investments and collaboration that can strengthen the semiconductor industry in both regions while ensuring strategic autonomy.

Key Aspects of the India-EU Semiconductor Pact

Information Sharing and Collaboration

Under the pact, India and EU aim to share experiences, best practices and information on their respective semiconductor ecosystems to promote mutual understanding. Additionally, they seek to identify areas for collaboration among universities, research organizations and businesses to drive innovation in semiconductors. Such knowledge exchange and joint research projects can accelerate technological progress.

Skill Development and Investments

The agreement underscores fostering skills, talent and workforce development tailored to the semiconductor sector. This can be achieved by conducting specialized workshops and training programs. Furthermore, the pact aims to facilitate partnerships and attract direct investments into the industry via summits that bring together key public and private stakeholders.

Ensuring Level Playing Field

The MoU emphasizes sharing information on granted public subsidies to ensure transparency and prevent unfair advantages to certain players. By exchanging data on incentive schemes and subsidies, both sides can ensure healthy competition and formulate policies that encourage more companies to enter the semiconductor value chain.

Areas of Collaboration

Joint Research and Innovation

The agreement aims to enable joint research, development and innovation projects between universities, research organizations and businesses in India and Europe to drive technological progress in semiconductors. By linking industry players with academic institutes through collaborative programs, the pact seeks to translate ideas into innovative solutions.

Building Resilient Supply Chains

Currently global supply chains for semiconductors are heavily centered on East Asia, especially China. The India-EU pact strives to build more resilient and diversified supply chains by bolstering production capacities across both regions. Enhanced cooperation will help reduce over-dependence on a single dominant player and mitigate risks of supply disruptions.

Economic Growth

The memorandum envisages increased investments, transfer of technology and job creation in both India and Europe, especially in semiconductor manufacturing, research and development. Attracting companies from across the semiconductor value chain can spur economic growth while strengthening strategic autonomy in this critical sector.

Future Meetings and Next Steps

The India-EU Trade and Technology Council (TTC), under which the semiconductor pact was signed, will convene in India for a ministerial meeting in **early 2024. This high-level engagement will assess the progress made under various TTC working groups and offer guidance for deepening cooperation across priority areas like semiconductors.

Additionally, the meeting will align India-EU collaborations more closely with the semiconductor strategies of other allies like the United States. Exploring synergies can enhance the impact of joint investments and R&D within the Indo-Pacific region’s technology landscape.

Final Thoughts

In the UCN team’s considered opinion, the Memorandum of Understanding signed between India and EU marks a milestone toward greater strategic alignment between the two sides in semiconductors – a sector of growing geopolitical significance. Utilizing each other’s complementary strengths, the agreement aims to build reliable and self-sufficient semiconductor supply chains spanning both regions.

If implemented effectively, the India-EU pact has the potential to boost technological competitiveness, translate into shared economic gains through investments and innovation, while reducing dependence on few dominant players. As global supply chain equations evolve post-pandemic, such strategic collaborations will shape the trajectory of the critical semiconductor industry.

FAQ

What is the recent trade agreement between India and the European Union?

In 2022, India and the European Union established the Trade and Technology Council to expand strategic cooperation on trade and technology. This high-level coordination platform aims to address challenges at the intersection of trade, technology, and security.

Who is leading India’s Semiconductor Mission?

The Semiconductor Mission of India is being led by the Minister of Railways, Communications, Electronics & Information Technology, Shri Ashwini Vaishnaw. He is responsible for spearheading India’s semiconductor strategy, including the $10 billion incentive plan to enable domestic manufacturing.

What is the nature of India-EU bilateral relations?

India and the European Union became “Strategic Partners” in 2004 to strengthen political and economic engagement. This partnership led to the creation of forums like the Trade and Technology Council in 2022 to boost collaboration in strategic areas.

Which countries does India majorly import semiconductors from?

India imports over 95% of its semiconductor needs, mainly from leading tech manufacturing hubs in Asia like China, Taiwan, South Korea, and Singapore. Developing domestic production and reducing reliance on imports is a key focus area.

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UCN Team
UCN Team

UCN Team: Combining expertise in UPSC Exams and Tech to deliver high-resolution, insightful content for aspiring civil servants

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