Agreement Between India and the European Commission

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.