What lies ahead for Indo-US ties in technology and trade, both civilian and military, during President Donald Trump’s second term in the White House?
That was the focus of a special StratNews Global Roundtable the first of a series of discussions on the subject.
The panelists included:
Dr Jaijit Bhattacharya, a globally renowned expert in technology driven governance & societal transformation, and the Founder & President, Centre for Digital Economy Policy Research, who is also the author of several bestselling books on e-governance and technology, and
Lt General Raj Shukla, (Retd) former Commander of the Army Training Command and a UPSC Member, and a highly decorated soldier who has been consistently championing the need to develop indigenous hi-tech in the military domain.
Sanjay Kumar, a former Senior Director at the US CHIPS Program Office, who has also held leadership roles at tech majors like Meta, Intel, Broadcom, and NXP.
Here are some of the key takeaways from the discussion
India’s Expectations
- India seeks access to various advanced technologies, including military tech, semiconductors, and pharmaceuticals.
- The US under Trump follows the “America First” policy, prioritizing jobs and technology retention in the US.
- Trump has been restrictive with technology-sharing, even with close allies in Europe and Canada.
- Despite this, India is considered a key partner in the Indo-Pacific region, making technology collaboration strategically important.
Strategic Interests
- The US is keen on maintaining a technological edge over China, which influences its approach to India.
- India is categorized as a “friend” for now, making technology sharing more likely.
- Key areas of potential collaboration include:
- Semiconductors: India could play a role in US efforts to counter China in chip manufacturing.
- Pharmaceuticals: The US depends on China for key drug ingredients, and India could help diversify supply chains.
- US-India collaboration is framed around “trusted” entities to reduce dependency on adversarial nations.
H-1B Visas and Beyond
- A large portion of US-India trade is in services, largely enabled by H-1B visas.
- Any restrictions on H-1B visas could significantly impact India’s economy and technology exposure.
- The visa program is under scrutiny by figures like Steve Bannon, who argue it depresses US wages.
Trump’s Approach
- Trump’s policies are expected to be erratic and highly transactional.
- US defence and technology transfers may come with conditions, such as requiring investments in the US rather than India.
- Some US policymakers value India as an autonomous strategic partner, but Trump may still prioritize domestic manufacturing.
Defence Collaboration
- India faces a challenging strategic environment, especially with China’s rapid military advancements.
- There is potential for deeper defence collaboration, but the US may push India to reform its defence procurement system.
- US policymakers criticize Europe’s defence spending, and prefer partners like India that actively counter China.
- India must be pragmatic and negotiate deals smartly, balancing dependency on multiple allies.
Why India Doesn’t Make Chips
- While India excels in semiconductor design, it lags in manufacturing due to:
- Lack of local demand: Most chips are designed in India but assembled in China or Taiwan and consumed in the US.
- Infrastructure issues: Power, water, and transportation remain challenges.
- Talent gap: Manufacturing requires highly specialized skills, which India lacks.
- Limited government incentives: Other nations like Taiwan and Singapore have provided stronger support.
- Lack of venture capital for deep tech: Indian investors are risk-averse compared to their US counterparts.
- India is beginning to establish fabs (chip manufacturing units), but success depends on generating local demand.
Investment Issues
- Investors globally remain cautious about funding new technology; they prefer safer returns over risky ventures.
- Venture capitalists in the US accept that only one in ten investments might succeed, but that one covers the losses of the others.
- India’s semiconductor manufacturing could begin in 4-5 years, factoring in 2-2.5 years for infrastructure setup and 1 year for testing and qualification.
- Initial test production might happen sooner, but full-scale manufacturing will take time, even with improved Indo-US ties.
Policy Problems
- The US government cannot force private companies to transfer technology, but it can influence them through policies.
- The Committee on Foreign Investment in the US (CFIUS) can block sensitive technology transfers.
- Technology transfers depend on market forces and whether India can afford to buy the tech.
- The US has started transferring Microelectromechanical Systems (MEMS) and sensor technologies to India, signalling a shift in policy.
- India is seen as an important part of a China+1 strategy for diversifying supply chains.
Expensive Ecosystem
- The semiconductor industry requires trillions of dollars, making it difficult for any single country to be fully self-sufficient.
- The US, Europe ($52 billion), and China ($100 billion) are investing heavily in semiconductor ecosystems.
- India can play a role in packaging, assembling, and downstream supply chains rather than leading in chip design or fabrication, and Indo-US collaboration can speed this up.
Geopolitical Shifts
- Trump’s return could reshape global alliances, potentially dividing the world into:
- China-led Asia
- Russia-led Europe
- US-led Western Hemisphere
- This could leave India to handle China alone, altering strategic calculations.
- Trump’s transactional approach could prioritise economic deals over military confrontations with China.
Tech and National Security
- Chips are as strategic as steel and aluminium once were, with implications for military capabilities.
- India has a growing drone industry, but 11 of the 12 key components are imported, mainly from China.
- Despite a large pool of STEM graduates, India remains at the low end of the technology spectrum, mainly aggregating and assembling rather than innovating.
- The Indian military remains dependent on external supply chains, which poses security risks.
Looking Ahead
- India needs deep-tech innovation beyond app development and IT services.
- Just as India leapfrogged landlines to mobile technology, it should invest in future tech now rather than catching up later.
- India’s $500 billion trade target with the US by 2030 suggests positive Indo-US economic trends.
- A self-sufficient technology ecosystem is critical for economic and security resilience.
Watch the full episode to get some fascinating insights on not just what India can expect, but what it can do to leverage trade and technology with the US under Donald Trump from these acclaimed experts from diverse domains.
