As the United States and India sign new deals, Delhi dreams of becoming a technological hub
A series of deals and investments in semiconductor testing and assembly in India were agreed during PM Modi's visit, but production will still have to wait. Some defence agreements have also been signed, not only to counter Beijing, but also to free Delhi from dependence on Moscow. Despite criticism for the deterioration of human rights at home, the visit was a great success for the Indian prime minister in view of next year's elections.
Washington (AsiaNews) – US President Joe Biden and Indian Prime Minister Narendra Modi announced a series of trade and defence agreements yesterday designed to improve military ties and microchip production.
Days before Modi's “historic visit” to the United States, the Indian government approved a US$ 2.75 billion plan to build a new semiconductor testing and assembly facility in India by chip maker Micron Technology, which will invest more than US$ 800 million in the project.
Delhi agreed to provide production-related incentives worth 110 billion rupees (US$ 1.34 billion) for the plant, which is expected to be built in Modi's home state of Gujarat, probably in the city of Sanand.
The new facility will not yet manufacture chips; instead, Micron (or other manufacturers) will be able to test and package them before shipment to customers.
For both countries, this is an important step in closer relations, following Biden’s decision to reduce the risks of domestic companies' dependence on China.
As part of the ongoing trade dispute between the world's two largest economies, Washington imposed a series of limits on the sale of microchip software to China in October last year, while Beijing in May barred Chinese companies from buying Micron products.
For Modi, who maintains a less assertive attitude towards China, this is undoubtedly a gain, and not only because doing business with the largest democracy in the world brings great prestige in view of next year's elections.
Since the COVID-19 pandemic, India has tried to present itself as an alternative to China by announcing a US$ 10 billion incentive to boost semiconductor production in the country. For now, it is still a work in progress, but in the not-so-distant future, it could proceed quickly.
In fact, in addition to Micron, US semiconductor toolmaker Applied Materials, which makes equipment and software to manufacture chips and other materials for electronics, plans to invest some US$ 400 million to set up an engineering and marketing centre, while chip manufacturer Lam Research has announced a training programme in India for up to 60,000 engineers.
Upon his arrival in New York, Modi met with multibillionaire Elon Musk, Tesla and SpaceX CEO. “I am confident that Tesla will be in India, and we will do so as soon as humanly possible,” Musk told a press after he met with Modi on Tuesday.
“I am planning to visit India next year,” Musk added. “I would like to thank PM Modi for his support, and hopefully, we will be able to announce something in the future. It is quite likely there will be a significant investment in India.”
This signals an end to the tensions between the Indian government and the electric vehicle maker after its decision last year to move production from India to the Middle East.
The many agreements signed recently by Washington and Delhi also concern defence, not only to prevent China's growth in power in the Indo-Pacific, but also to reduce India's dependence on Russia for arms supplies.
General Electric's aerospace division has signed a deal with India's state-owned Hindustan Aeronautics to make Tejas fighter jet engines for the Indian Air Force. Delhi also plans to buy 31 MQ-9B drones by General Atomics, another company that announced the creation of a new facility in India.
India's Vikram Solar will invest up to US$ 1.5 billion to help the US produce solar panels and be competitive in the clean energy sector. India will also join the Minerals Security Partnership, a US-led mineral sourcing initiative.
Finally, trade and cooperation between the two countries’ space programmes will be facilitated, while the US will make visas easier for Indian workers.
However, some experts have raised doubts about the transfer of sensitive technologies to India, which continues to maintain close military and economic relations with Russia even after the invasion of Ukraine.
In Congress, two Muslim and several progressive lawmakers, including Alexandra Ocasio-Cortez, boycotted Modi's speech to the US Congress, citing aggressive Hindu nationalism against religious minorities and restrictions on press freedom since Modi came to power.
At a press conference, when asked what measures he would take to improve the rights of Muslims and support freedom of speech, Indian Prime Minister Modi responded by saying that there is no need for improvement, since “there’s absolutely no space for discrimination” under his administration.
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