India-Japan agreement on semiconductor supply chain gets Modi cabinet’s nod

India’s Union cabinet led by Prime Minister Narendra Modi on Wednesday approved a memorandum of cooperation (MoC) signed with Japan on developing a semiconductor supply chain partnership, an official statement said. 

The memorandum focuses on research and development (R&D), manufacturing, design, and talent development for the semiconductor industry. It was signed in July between India’s ministry of electronics and information technology of Japan’s ministry of economy, trade and industry.

“The MoC intends to strengthen cooperation between India and Japan toward enhancement of semiconductor supply chain, recognizing the importance of semiconductors for the advancement of industries and digital technologies,” the statement said. 

The agreement promotes both government to government (G2G) and business to business (B2B) cooperation on opportunities to advance resilient semiconductor supply chain and leverage complementary strengths. It envisages improved collaboration leading to employment opportunities in the field of IT.

The MoC will remain in force for a period of five years from the date of signing by the parties. 

Japan is the second Quad partner after the US to sign an agreement with India for the joint development of the semiconductor ecosystem and maintain the resilience of its global supply chain. 

The agreement is part of the government’s efforts to create a conducive environment for electronics manufacturing in India. India has launched the ‘Programme for Development of Semiconductor and Display Manufacturing Ecosystem’ with a view to ensure the development of a robust and sustainable semiconductor and display ecosystem in India. Besides, India Semiconductor Mission (ISM) has been established under Digital India Corporation (DIC) to drive India’s strategies for development of semiconductor and display manufacturing ecosystem in the country.

Earlier during Prime Minister Modi’s visit to Japan in October 2018, India-Japan Digital Partnership (IJDP) was launched to expand existing areas of cooperation as well as new initiatives focusing digital ICT technologies. Based on the ongoing IJDP and India-Japan Industrial Competitiveness Partnership (IJICP), this MoC would further broaden and deepen the cooperation in the field of electronics ecosystem, the government statement said. 

The MoC was signed between minister for electronics and IT Ashwini Vaishnaw and Japan’s minister of economy, trade and industry Yasutoshi Nishimura in Delhi on 20 July.  

Vaishnaw had announced at the signing that India and Japan will create an “implementation organization” to work on government-to-government and industry-to-industry cooperation. 

“Semiconductor industry will become a $1 trillion industry from USD 650 billion at present. This will require a huge amount of talents, significant growth at multiple locations in the world. Japan sees India as a partner where complimentary strengths can be used,” Vaishnaw had said.

With around 100 semiconductor manufacturing plants, Japan is among the top five countries to have a semiconductor ecosystem. Japan houses companies that are global leaders in raw form of semiconductor wafers, chemical and gases, lenses that are used in chip manufacturing equipment, and display technologies.