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Business News/ News / World/  India-Japan forge strategic ties to strengthen semiconductor manufacturing, supply chains

India-Japan forge strategic ties to strengthen semiconductor manufacturing, supply chains

India and Japan have discussed collaboration in areas such as semiconductors, supply chains, aiming for $35.9bn Japanese investment in India by 2027. The talks also focused on enhancing cooperation in defence equipment and technology.

External Affairs Minister S Jaishankar meets Japanese Foreign Minister Yoshimasa Hayashi. (ANI Photo) (Dr. S. Jaishankar Twitter)Premium
External Affairs Minister S Jaishankar meets Japanese Foreign Minister Yoshimasa Hayashi. (ANI Photo) (Dr. S. Jaishankar Twitter)

Indian and Japanese officials held discussions in New Delhi, exploring potential collaboration in crucial areas such as semiconductors and establishing robust supply chains. The talks aimed at achieving a target of $35.9 billion Japanese investment in India by 2027.

During the meeting, the Foreign Ministers of both countries, S. Jaishankar and Yoshimasa Hayashi, also deliberated on enhancing cooperation in defence equipment and technology. The discussions took place as part of a two-day visit by Hayashi to the Indian capital, AP reported.

The global supply of components and raw materials required for various products, ranging from automobiles to computer chips, has been severely impacted by Russia's conflict in Ukraine.

According to a statement by the External Affairs Ministry, “Hayashi and Jaishankar also emphasized the crucial role of a strong partnership between India and Japan in ensuring an open and prosperous Indo-Pacific region that is inclusive and rules-based."

As part of their discussions, they explored cooperation within multilateral and plurilateral frameworks, which included the Quad grouping involving the United States and Australia. The main objective of this coalition is to address the increasing challenges presented by China's assertive actions in the region.

Jaishankar and Hayashi expressed contentment over the enhancement of defence and security cooperation between India and Japan, which included frequent exercises and dialogues involving all three services, as per the statement.

Also Read: Japan-India maritime exercise begins in Visakhapatnam

Prime Minister Narendra Modi's aspirations of establishing a domestic chipmaking industry faced a possible setback recently when electronics giant Foxconn withdrew from a $19.5 billion semiconductor joint venture with Indian mining conglomerate Vedanta Ltd.

Earlier on July 21, India and Japan signed a memorandum of understanding (MoU) on semiconductor development, which will include design, manufacturing, equipment research and talent development.

Union Minister Ashwini Vaishnaw said that the agreement as a substantial step to create a resilient complete value chain.

"The MoU is on five fronts, viz. semiconductor design, manufacturing, equipment research, talent development, and bringing resilience to the semiconductor supply chain," said Vaishnaw.

He added that the agreements such as the US-India initiative on Critical and Emerging Technology (iCET) and the one with Japan provided clear directional support when industries from the respective nations engage in talks. The government's strategy is now evidently focused on supporting industries in India, whether collaborating with the US or Japan, he said.

The Japan MoU follows investments from Micron Technology which recently announced to set up a semiconductor unit in India with an investment of $2.75 billion and Applied Materials which is going to set up a collaborative R&D centre with an investment of $400 million.

In February of the previous year, the two companies made a public announcement about their collaborative effort to establish a joint venture in India aimed at manufacturing chips and display panels.

AP further reported that India has placed significant emphasis on developing a robust chipmaking sector as part of its self-reliance strategy to ensure stable supply chains. To support semiconductor and display manufacturing projects, the country has introduced financial incentives of up to 50% of the project costs, totalling $10 billion.

India and Japan have a robust economic relationship, with trade between the two nations amounting to $20.57 billion in the fiscal year 2021-2022.

Mausam Jha
A journalist covering International Relations, and Business.
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Updated: 28 Jul 2023, 12:09 PM IST
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