US-India Ink Semiconductor Deal To Counter China's Growing Tech Dominance Under Xi Jinping

The U.S. and India signed an agreement regarding semiconductors, with the aim of enhancing coordination in their chip-industry incentive plans.

What Happened: U.S. Commerce Secretary Gina Raimondo told the media that the memorandum of understanding focuses on information-sharing and policy dialogue to avoid over-subsidization.

The U.S. companies are optimistic about the future of ties with the South Asian nation as New Delhi looks to boost its role in the global technology supply chain, Raimondo said, adding that U.S. firms had no specific investment commitments to announce. 

"We would like to see India achieve its aspirations to play a larger role in the electronics supply chain," Raimondo said, as she concluded her week-long trip to India where she met public and private-sector leaders. 

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Last August, the President Joe Biden-led administration took the lead in investing approximately $52 billion into the U.S. semiconductor industry. This investment is viewed as crucial for enhancing the competitive edge and U.S. national security by decreasing the country’s reliance on semiconductor chips from Taiwan and other parts of Asia. The Commerce Department also imposed sweeping export controls on chipmaking technology for China to address concerns about the threat to U.S. strategic interests from Beijing.

India has been of key importance to the U.S. and its allies, which has seen the South Asian nation as a great competition to contain China's growing assertiveness in the tech sector.

The Prime Minister Narendra Modi-led government in India also sees an opportunity to narrow the country’s tech gap with China, especially with Western investors and companies becoming disappointed due to the crackdowns on the private sector under Xi Jinping's administration.

India also seeks to attract more big-ticket investments under a $10-billion chip and display production incentive plan. Last year, New Delhi also raised fiscal support for new local semiconductor facilities to cover 50% of project costs.

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