India launched a series of preferential policies to attract chip companies to invest in chip production in the country

Chinese state-run publication Global Times has said that as the US and India join hands to address semiconductor supply chain challenges, the Joe Biden government’s offer to help India build up its semiconductor manufacturing capacity is just a sham. appears to be.

During her visit to India this week, Afreen Akhtar, Deputy Assistant Secretary of State for South and Central Asia, US, said they would help India increase its semiconductor manufacturing capacity.

Akhtar led the semiconductor business mission to India and met top government officials in the capital.

According to the Global Times, the announcement is “designed to entice China into a geopolitical game to exclude China from the global chip industrial chain, rather than a commitment with genuine investment plans to support India’s chip manufacturing.”

The report noted that the Chips and Science Act, which aims to provide $52 billion in subsidies for chip makers to build manufacturing plants in the US, is an effort to create an industrial chain focused on US interests, thereby India is unlikely to benefit.

India has introduced a series of preferential policies to attract chip companies to invest in production in the country. Last year, the government announced a Rs 76,000 crore Performance Linked Incentive (PLI) scheme in the semiconductor sector to boost local manufacturing.

As India and the US doubled down on domestic semiconductor manufacturing, China saw its biggest monthly decline in chip manufacturing in August, driven by Covid restrictions and weak demand.

This was also the second consecutive month of decline in chip manufacturing. Production declined 16.6 per cent to 27.2 billion units in July.

Meanwhile, the Gujarat government has partnered with Vedanta and Foxconn to invest Rs 1.54 lakh crore to achieve self-reliance in semiconductor manufacturing.

According to the India Electronics and Semiconductor Association (IESA) and Counterpoint Research report, India’s semiconductor parts market is expected to reach $300 billion in cumulative revenue by 2026 due to ‘Make in India’ and Production Linked Incentive (PLI) schemes. Will promote local sourcing of semi-parts in the coming years.

The report further said that as India seeks to become a chip powerhouse, it should not “take the bait placed by US diplomats in the hope that the US will provide it with vital resources”.

“First of all, Akhtar said that the aid the US will provide to India cannot be disbursed on it.”

“Even though the US chose India as a partner in semiconductor cooperation in geopolitical calculations, it does not mean that it will actually help India boost the semiconductor sector,” the report said.

The real question before India is whether it wants to upgrade its chip manufacturing sector and move towards the upstream industrial chain, “should it build a solid industry base rather than pin its hopes on US lip service.” PLC/GT


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