U.S., India Set To Ink Pact On Chips, Discuss Export Control

U.S. Commerce Secretary Gina Raimondo is expected to sign a memorandum of understanding on semiconductors, particularly on information sharing for commercial opportunities.

Raimondo, who is on a four-day visit to India, met External Affairs Minister S Jaishankar on Thursday and launched the India-U.S. Strategic Trade Dialogue, which is expected to focus on export control.

The Commerce Secretary will be meeting her Indian counterpart, Piyush Goyal, on Friday. Raimondo will also participate in the India-U.S. Commercial Dialogue and the CEO Forum on the same day.

Raimondo said that 10 chief executive officers of leading U.S. companies have travelled with her for the forum. Their role would be to work together with the Indian CEOs to develop recommendations for how the two governments can expand commercial ties and create economic opportunities in both countries, she said.

A recent example is the deal between Air India Ltd. and Boeing Co. that is expected to generate up to a million jobs across the U.S.

Raimondo said the contours of the Memorandum of Understanding would delve on how the two countries would share information about the commercial opportunities of semiconductors and policies that would encourage private sector investment in the ecosystem.

“We would like to see India achieve its aspirations to play a larger role in (the) electronic supply chain,” she said. “And to that end, the MoU that I’m signing on this trip around semiconductors is designed to help achieve that goal.”

The official highlighted that India and the U.S. are at the beginning of implementing semiconductor incentive programmes in their countries. Discussions are underway on how these investments can be coordinated—in terms of how they can be administered and aligned with the demand.

The MoU is expected to help draw up a common picture of supply and demand in the industry, map the supply chain and see where there might be opportunities for joint ventures and partnerships in technology, job training, and research and development.

“We are looking for near-term commercial opportunities, but also for longer-term strategic opportunities because this isn’t a one-year collaboratioṇ,” she said. “We think this is a five–10–20-year collaboration between (the) U.S. semiconductor industry and electronic supply chain, and India.”

According to Raimondo, the U.S.-India collaboration was to make semiconductor supply chains more resilient, secure and diversified.

This comes at a time when the U.S. government is looking to implement the Chips and Science Act, which will increase its focus on indigenous manufacture and R&D into semiconductor production.

India’s Cabinet also approved a Production-Linked Incentive Scheme last September for the development of semiconductors and display manufacturing ecosystem with an outlay of Rs 76,000 crore.

The Indo-Pacific Economic Framework, which the two countries are a part of, was also a topic of discussion. The last special meeting of the IPEF was hosted in New Delhi from Feb. 8–11. Raimondo had described it as “extraordinarily successful”.

The IPEF was launched in May last year by the U.S., India and 12 other partner countries of the Indo-Pacific region. Raimondo expressed hope that the IPEF would prove to be more economically impactful than a free trade agreement with India, according to a PTI report.

Raimondo reportedly said a trade agreement with India was presently not on the table and the U.S. Congress has said that there was no appetite for an FTA. She expects the IPEF to serve as a modern equivalent of a trade agreement. The 14 IPEF partners represent 40% of the global gross domestic product, and 28% of the global goods and services trade.

India is part of three out of the four pillars of the framework, relating to supply chain, infrastructure and tax and anti-corruption. “We are making great progress and hope to have those pillars signed up by the end of the year,” Raimondo said.

She said that there were discussions about export control in the context of increasing transparency in the working relationship between the two countries. Raimondo was commenting on a question about export control in the context of China and semiconductors, and Russia and critical technology for the war in Ukraine.

The Commerce Secretary said that in her meeting with Jaishankar, a new initiative—the India-U.S. Strategic Dialogue—was launched. It will be led by the U.S. Department of Commerce and the Bureau of Industry and Security to focus on export control.

Raimondo, who came to India on Tuesday, also met with Union Finance Minister Nirmala Sitharaman on Thursday.

The previous India-U.S. commercial dialogue took place in February 2019 before the coronavirus pandemic and the India-U.S. CEO forum was soft-launched on Nov. 9 last year.

The U.S. is India’s largest trading partner and export destination, accounting for 17.71% of merchandise exports, which came up to $65.39 billion from April 2022 to January 2023. The bilateral trade, which was aided by growth in goods during the 2022 calendar year, surpassed $131 billion in total.