January 28, 2025 /SemiMedia/ — India is actively pursuing a complementary partnership with Japan in the semiconductor sector, aiming to attract Japanese investment and build a robust manufacturing supply chain between the two nations. This initiative is expected to not only bolster India’s competitiveness in the global semiconductor market but also provide Japanese companies with opportunities to tap into emerging markets.

In a recent public address, India’s Ambassador to Japan, Sibi George, emphasized the complementary nature of the two countries’ semiconductor industries. He stated that India focuses on the production of traditional chips, while Japan specializes in the research and production of high-end semiconductors. As such, the two nations are not competitors in the same market but can instead grow together through collaboration. India benefits from a large, cost-effective labor force, while Japan’s technological prowess places it at the forefront of semiconductor innovation globally.

The global semiconductor supply chain has faced significant challenges in recent years, particularly in the aftermath of the pandemic, which triggered a persistent chip shortage that has disrupted manufacturing industries worldwide. In response, the Indian government has rolled out several policies designed to attract foreign investment, especially in semiconductor production, to accelerate the development of the domestic supply chain. These measures include a $10 billion semiconductor incentives program and the optimization of foreign direct investment (FDI) policies. Additionally, India is ramping up infrastructure development to create a more conducive manufacturing environment and build the talent pool required for a thriving semiconductor industry.

Against this backdrop, cooperation between India and Japan holds considerable strategic importance. India’s government has set an ambitious goal of increasing the manufacturing sector’s contribution to GDP to 25% by 2030, which would provide strong policy support and market demand for the semiconductor industry. Japan, as a global leader in semiconductor equipment and material production, is seeking to leverage partnerships with India to address gaps in its production base and expand its presence in international markets. Meanwhile, India sees significant potential in collaborating with Japan on high-end chip manufacturing and advanced materials technologies.

India’s semiconductor industry also faces challenges related to talent shortages and technological development. Through collaboration with Japan, India hopes to attract more technical experts and engineers, thereby strengthening its domestic R&D capabilities and laying the foundation for future growth. Japanese semiconductor companies, in turn, can benefit from India’s low-cost labor and favorable government incentives by establishing production facilities in the country.