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India launches semiconductor mission amid FTA talks with Taiwan

Delhi’s insatiable appetite for chips has it courting Taiwan’s big tech firms

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Scene at an Indian satellite TV production facility.

Scene at an Indian satellite TV production facility. (CNA photo)

TAIPEI (Taiwan News) — India launched its new scheme to attract investment in semiconductor manufacturing on Saturday (Jan. 1) by formally beginning to accept applications to set up fabs in the South Asian country.

India’s Union Cabinet on Dec. 15 passed the Program for Development of Semiconductors and Display Manufacturing Ecosystem in India, a program that aims to bring about at least two greenfield semiconductor fab projects. India’s IT ministry has now released guidelines for the rollout and set up an online portal for industry players to apply through, according to a report by the Economic Times.

The news comes just weeks after India began negotiations with Taiwan on a Free Trade Agreement (FTA) that coincide with bilateral talks on a potential semiconductor manufacturing hub in an Indian city, per BusinessToday-India. Delhi has a string of preferred sites it has put forward, and either Taiwan Semiconductor Manufacturing Company (TSMC) or United Microelectronics Corporation (UMC) reportedly may sign on to the project.

The project, if realized, would be a major step forward for economic ties between the countries. Though India and Taiwan set up representative offices in each other’s capitals in 1995, the Indian side proceeded cautiously, fearing a backlash from China amid an ongoing border dispute between the two countries, per the Hindustan Times.

Yet India's demand for semiconductors is due to grow 50-fold over the next three years, estimated to reach US$100 billion (NT$2.76 trillion) by 2025. This is why Delhi is now wheeling out US$10 billion worth of incentive schemes to attract tech players — including Taiwanese firms — to its door.

The plan may also help both India and Taiwan fulfill specific strategic goals. For India, an onshore chip-making hub is a manifestation of the Modi government’s Atmanirbhar Bharat (“Self-Reliant India”) policy, while for Taiwan, offshoring to India dovetails with Taiwanese firms’ moves to divert production away from China.