Agreement Between India and the European Commission
Context:
Recently, the Cabinet Greenlights Agreement Between India and the European Commission on Operational Arrangements Regarding Semiconductors Ecosystems within the EU-India Trade and Technology Council Framework.
Relevance:
GS-03 (Science and technology, International relations)
Main Details:
- This agreement, inked in November 2023, falls under the purview of the EU-India Trade and Technology Council (TTC).
- The agreement’s primary objective is to fortify collaboration between India and the EU, fostering advancements in semiconductors for the progression of industries and digital technologies.
- Both governmental (G2G) and business-to-business (B2B) cooperation will be established to enhance the resilience of semiconductor supply chains.
- Additionally, the agreement will harness complementary strengths to encourage cooperative efforts in the realm of semiconductors.
What are semiconductor chips?
- Semiconductors are materials with a conductivity between conductors and insulators.
- They can be pure elements like silicon or compounds like gallium arsenide.
- Semiconductor chips are the basic building blocks of modern electronics and information technology products.
- They are essential components in automobiles, household gadgets, and medical devices.
- The COVID-19 pandemic has increased the demand for semiconductor chips as more activities shift online.
- Shortages of semiconductor chips have caused disruptions in various industries, leading to pent-up demand and subsequent supply shortages.
Significance of Semiconductors:
- Semiconductors play a crucial role across various sectors like aerospace, automobiles, communications, clean energy, IT, and medical devices.
- High demand for semiconductors has led to a global chip shortage, impacting growth and jobs in the economy.
- To address this, the government had sanctioned ₹76,000 crore under the Production-Linked Incentive (PLI) scheme in December 2021 to encourage domestic semiconductor manufacturing.
- Semiconductors and displays are the backbone of modern electronics, driving the transition to Industry 4.0.
