Trump 2.0: Redefining India-US Ties In Technology And Semiconductors

Donald Trump’s re-election as U.S. President could have a big impact on India-US relations, especially in areas like technology, chips, and semiconductors. As he begins his second term on January 20 next year ,, both countries will face a mix of opportunities and challenges that could shape their tech and economic ties in new ways.

In recent years, semiconductors have become a key part of the global economy and a major area of focus for many countries. The COVID-19 pandemic exposed weaknesses in the global supply chain, showing how heavily the world depends on a few producers. This has pushed countries to reduce their reliance on others and invest more in making semiconductors locally.

Trump’s government has strongly advocated for reducing dependence on Chinese manufacturing and encouraged shifting supply chains to friendly countries, a strategy called “friend-shoring.” This approach fits well with India’s “Make in India” program, which aims to turn the country into a global center for manufacturing.

India is working hard to grow its semiconductor industry by introducing policies and incentives to attract investments. The goal is to create a strong foundation for semiconductor production and development in the country.

The Production Linked Incentive (PLI) scheme has played a big role in boosting manufacturing in India. It provides financial rewards to companies that start production units in the country. For example, companies like Dixon Technologies are now important players, making smartphones and computers for global brands under this program. This progress is likely to grow even more with increased focus on India-US cooperation in the semiconductor industry.

Trump’s re-election creates both opportunities and challenges for the semiconductor industry. While his focus on making the economy more self-reliant sounds promising, it could also mean new tariffs and trade restrictions, which might make global business more complicated. During his campaign, Trump suggested adding high taxes, like a 25% tariff, on products imported from countries like Canada and Mexico. These measures could increase the costs of making semiconductors since the industry depends on parts and materials from around the world. However, this also gives India a chance to step up as a good option for semiconductor manufacturing. With its skilled workers and investor-friendly policies, India could attract more businesses in this sector.

The Initiative on Critical and Emerging Technologies (iCET), started in January 2023, has become a key part of India-US partnership in advanced technology areas. The second iCET Summit, held in July 2024, showcased the progress achieved in semiconductors, clean energy, and advanced technologies. Both countries have agreed to strengthen their partnership by focusing on sharing technology, working together on research and development, and building systems that support innovation. This initiative is set to play an important role in shaping the future of India-US partnerships in advanced technology.

In the coming years, an important area to watch will be how the semiconductor supply chain develops. For a long time, a few major companies have controlled the industry, with Taiwan’s TSMC being a global leader in chip manufacturing. But the global situation is changing, and countries like India and Japan are becoming key players in the semiconductor supply chain. TSMC is working to localize its supply chain and grow its presence in the US and Japan, showing how the industry is shifting. The company’s choice to work with Asian suppliers like Taiwan’s Kinik and Japan’s Ebara for important manufacturing solutions highlights the increasing importance of regional partnerships in the semiconductor industry.

India is making early efforts to develop its own Electronics Manufacturing Services (EMS) industry, which is worth noting. Government subsidies and incentives have encouraged companies like Dixon Technologies to set up operations. Dixon now produces smartphones for brands like Motorola and Xiaomi, as well as PCs for companies like Acer and Lenovo. These efforts are part of a larger plan to build a self-sufficient semiconductor industry in India. The goal is to rely less on imports and strengthen the country’s ability to produce semiconductors locally.

Trump’s re-election brings uncertainty about the future of the US CHIPS and Science Act. This act is designed to promote semiconductor manufacturing in the US by offering large investments and incentives. Trump’s criticism of the Act and his plans for new tariffs could create challenges for the semiconductor industry. However, this also gives India a chance to become a stronger partner for the US in advanced technology fields. India can attract investments and encourage partnerships by aligning its policies with the US’s friend-shoring approach, helping to boost innovation and growth.

In summary, Donald Trump’s second term as US President is likely to significantly influence India-US relations, especially in the areas of technology, chips, and semiconductors. Although there are some challenges and uncertainties, there are also great opportunities for collaboration and growth. Both countries can use their strengths to create a strong and innovative semiconductor industry that supports their economies and strengthens their partnership. As the global semiconductor industry keeps changing, India and the US are in a good position to adapt to these shifts and work together to reach their common goals. (IPA Service)