Strengthening Ties: India and Japan Explore Collaboration in Semiconductors and Supply Chains
Indian and Japanese officials recently engaged in discussions in New Delhi to explore potential collaborations in crucial areas such as semiconductors and establishing robust supply chains. These talks aimed at achieving a target of $35.9 billion Japanese investment in India by 2027, fostering economic growth and technological advancements.
During the discussion, both countries’ Foreign Ministers, S. Jaishankar and Yoshimasa Hayashi, discussed ways to improve cooperation in defense equipment and technology. This two-day visit by Hayashi to the Indian capital marked a significant step in strengthening bilateral ties and opening doors for future collaborations.
The ongoing global supply chain disruptions, triggered by Russia’s conflict in Ukraine, have underscored the importance of building resilient supply chains and reducing reliance on single sources. To address this challenge, the Indian and Japanese officials emphasized the crucial role of a strong partnership in ensuring an open, inclusive, and rules-based Indo-Pacific region.
As part of their discussions, both nations explored cooperation within multilateral and plurilateral frameworks, including the Quad grouping involving the United States and Australia. The primary objective of this coalition is to address the increasing challenges posed by China’s assertive actions in the region and promote stability and prosperity.
The enhancement of defense and security cooperation between India and Japan was also a topic of contentment during the discussions. Both countries have been engaging in frequent exercises and dialogues involving all three services, further solidifying their strategic ties.
Prime Minister Narendra Modi’s vision of establishing a domestic chipmaking industry faced a recent setback when electronics giant Foxconn withdrew from a $19.5 billion semiconductor joint venture with Indian mining conglomerate Vedanta Ltd. However, in a positive development, India and Japan signed a memorandum of understanding (MoU) on semiconductor development on July 21. This MoU will encompass design, manufacturing, equipment research, and talent development, marking a significant step toward building a resilient and complete value chain in the semiconductor sector.
Union Minister Ashwini Vaishnaw hailed the agreement as a substantial step in creating a robust semiconductor industry in India. The Memorandum of Understanding (MoU) is centered on five key areas, which are semiconductor design, manufacturing, equipment research, talent development, and enhancing the resilience of the semiconductor supply chain. Such collaborations with the US-India Initiative on Critical and Emerging Technology (iCET) and the one with Japan provide crucial support to industries engaging in talks, aligning with the government’s strategy of bolstering India’s industries through international partnerships.
Japan’s MoU follows investments from Micron Technology and Applied Materials, both committing substantial sums to set up semiconductor units in India. Micron Technology announced an investment of $2.75 billion, while Applied Materials will establish a collaborative R&D center with an investment of $400 million. These investments will further strengthen India’s position in the global semiconductor landscape.
Recognizing the significance of a robust chipmaking sector in India’s self-reliance strategy, the country has introduced financial incentives of up to 50% of project costs, totaling $10 billion, to support semiconductor and display manufacturing projects. This move is aimed at reducing dependency on external sources and fostering domestic technological capabilities.
India and Japan share a strong economic relationship, with trade between the two nations amounting to $20.57 billion in the fiscal year 2021-2022. By expanding collaboration in semiconductors and supply chains, these countries aim to not only boost their economic ties but also contribute to the stability and prosperity of the Indo-Pacific region.
As India continues to pursue technological advancements and self-reliance, collaborations with countries like Japan bring opportunities for innovation, growth, and progress. Together, they aspire to create a brighter future for their nations and the broader international community.