Agreement Between India and the European Commission


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.


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.