India and the European Union (EU) have recently signed a Memorandum of Understanding (MoU) to enhance collaboration in the semiconductor industry. This significant agreement, aimed at bolstering the resilience of semiconductor supply chains, was signed on November 25th in New Delhi by India’s Minister of Electronics, IT, and Communications, Ashwini Vaishnaw, and the European Commissioner for Internal Markets, Thierry Breton.
Key Aspects of the India-EU Semiconductor Agreement
- Scope of the Agreement: The MoU encompasses cooperation in several areas, including research and innovation, talent development, partnerships, and the exchange of market information. The primary focus is to build robust semiconductor supply chains and spur mutual innovation. It includes identifying areas for collaboration in R&D among universities, businesses, and research organizations, while also promoting skills, workforce development, and investment in the semiconductor space.
- Strategic Significance: The agreement holds strategic significance, especially in the post-COVID era, where semiconductors have become critically important. It aligns with the global trend of diversifying supply chains, particularly in the Indo-Pacific region, and is expected to reduce dependence on China-dominated supply chains.
- Trade and Technology Council (TTC) Meeting: The signing of the MoU was timed with the TTC meeting in New Delhi, initiated by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen. The TTC focuses on collaboration in semiconductors, high-performance computing, digital infrastructure, clean energy technologies, and strengthening supply chain resilience. The next TTC meeting and India-EU Summit are scheduled for early 2024 in India.
- India-EU Free Trade Agreement Negotiations: The MoU aligns with India’s broader plans, including the $10 billion incentive for chip manufacturing in the country. This initiative is expected to facilitate investments, joint ventures, and technology partnerships, including the establishment of manufacturing facilities.
Economic and Industrial Implications
The agreement between India and the EU on semiconductors is a step towards enhancing the global semiconductor supply chain’s resilience and promoting innovation. By collaborating in areas of research and development, talent development, and information exchange, both regions aim to foster a more robust and diversified semiconductor ecosystem.
This strategic partnership is expected to bring mutual benefits in terms of technological advancement, skill development, and economic growth, particularly in the semiconductor industry. The focus on ensuring a level playing field in the sector, particularly by exchanging information on governmental subsidies, is also notable. This approach aims to foster transparency and fair competition, essential for maintaining a healthy and competitive semiconductor industry landscape.
As India and the EU continue to meet regularly and report to the Trade and Technology Council, this collaboration is likely to yield significant advancements in semiconductor technology, contributing to the overall strength and resilience of the global digital landscape.