India and Japan look to collaborate in building semiconductors and resilient supply chains

by: ASHOK SHARMA, Associated Press

Posted: Jul 28, 2023 / 02:29 AM MDT

Updated: Jul 28, 2023 / 02:31 AM MDT

NEW DELHI (AP) — India and Japan explored collaborating in critical technologies, including semiconductors and resilient supply chains, as part of plans to reach a target of $35.9 billion Japanese investment in the country by 2027, officials said on Friday.

Foreign Ministers of India and Japan, S. Jaishankar and Yoshimasa Hayashi, met in New Delhi on Thursday and also discussed ways to deepen defense equipment and technology cooperation. Hayashi is on a two-day visit to the Indian capital.

Russia’s war in Ukraine has disrupted the global supply of parts and raw materials needed to complete a variety of products – from cars to computer chips.

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, a statement by India’s External Affairs Ministry said.

They discussed cooperation under multilateral and plurilateral frameworks, including the Quad grouping that also includes the United States and Australia, the statement said. The grouping aims at countering the growing challenge posed by an aggressive China in the region.

Japan considers India an indispensable partner in achieving a free and open Indo-Pacific, Hayashi said at a meeting with business leaders from the two countries.

He said he has been encouraging Japanese companies to invest in 15 key sectors identified by India as eligible for subsidies. These include telecommunications equipment, automobiles, and applied chemical batteries.

“All of this has led to the remarkable growth in Japanese investment into crucial technologies such as medical equipment, electronics, and household electric appliances,” Hayashi said.

Jaishankar and Hayashi expressed satisfaction at the strengthening of defense and security cooperation between the two countries, including regular exercises and talks between all three services, the statement said.

Indian Prime Minister Narendra Modi’s ambitions to build a chipmaking industry suffered a potential setback earlier this month as electronics giant Foxconn backed out of a $19.5 billion semiconductor joint venture with Indian mining conglomerate Vedanta Ltd.

In February last year, the two companies announced their joint venture to manufacture chips and display panels in India.

India has made building a chipmaking sector a national priority as part of a self-reliance policy to secure stable supplies. It is offering financial incentives of up to 50% of project costs under a $10 billion plan for semiconductor and display manufacturing projects.

India and Japan share strong economic ties. Trade between the two was worth $20.57 billion in fiscal year 2021-2022.