US views India as "Highly Strategic Partner" for AI and Supply Chain security, American official says

The designation of India as a "Highly Strategic Partner" by the United States for securing global supply chains in Artificial Intelligence (AI) and semiconductors marks a significant milestone in the evolving bilateral relationship. This statement, made by a senior American official, underscores a deepening alignment on critical technology issues, moving beyond traditional defense and diplomatic ties to encompass the foundational elements of future economic and national security.

The background to this partnership is rooted in several interconnected global developments. Firstly, the COVID-19 pandemic exposed severe vulnerabilities in global supply chains, particularly for essential components like semiconductors. Manufacturing concentration in a few geographies, predominantly East Asia, highlighted the risks of disruption due to geopolitical tensions, natural disasters, or pandemics. Secondly, the escalating technological rivalry between the US and China has spurred Western nations to seek diversification and 'de-risking' of their supply chains, especially in critical and emerging technologies like AI and advanced computing. Thirdly, AI's transformative potential across industries, from healthcare to defense, makes its development and ethical governance a strategic imperative for leading nations. India, with its vast talent pool in IT, a burgeoning digital economy, and a commitment to democratic values, naturally emerges as a crucial partner in this landscape.

What precisely happened is that a senior US official publicly affirmed India's status as a 'Highly Strategic Partner' in these crucial domains, simultaneously dismissing any notion that political tensions might have hindered India's participation in recent high-level dialogues. This re-affirmation is not an isolated event but a continuation of initiatives like the 'Initiative on Critical and Emerging Technologies' (iCET), launched in January 2023 by the National Security Advisors of both countries. iCET aims to elevate and expand strategic technology partnerships and defense industrial cooperation between the US and India, focusing on co-development and co-production of technologies ranging from AI and quantum computing to semiconductors and space.

Key stakeholders in this collaboration include the governments of India and the United States, specifically their respective Ministries of External Affairs/State Department, Departments of Commerce, and Ministries of Electronics and Information Technology. On the industry side, major Indian conglomerates like Tata and Reliance, which are exploring ventures into semiconductor manufacturing and AI applications, are crucial. US tech giants such as Intel, Micron, NVIDIA, and Qualcomm, with their extensive expertise and investment capabilities, are also pivotal. Research institutions, universities, and startups in both countries will play a vital role in R&D and innovation. Globally, other Quad members (Australia, Japan) and IPEF (Indo-Pacific Economic Framework) partners also have a vested interest in resilient supply chains.

This partnership holds immense significance for India. Economically, it can accelerate India's 'Make in India' and 'Atmanirbhar Bharat' (self-reliant India) initiatives by attracting foreign direct investment (FDI) into high-tech manufacturing, particularly in semiconductor fabrication and assembly, testing, and packaging (ATP) units. It promises technology transfer, skill development, and job creation in advanced sectors, boosting India's ambition to become a global electronics and manufacturing hub. Politically and strategically, it elevates India's global standing as a reliable and democratic partner in critical technologies, reinforcing its strategic autonomy while contributing to a more diversified and secure global technology ecosystem. This also aligns with India's broader foreign policy objectives of strengthening multilateralism and balancing geopolitical influences, particularly in the Indo-Pacific.

Historically, the US-India relationship has evolved significantly from the Cold War era's non-alignment to a comprehensive global strategic partnership. Key milestones include the 2005 Civil Nuclear Deal, which normalized bilateral relations, and the subsequent deepening of defense and security cooperation. The current focus on critical technologies represents a natural progression, reflecting India's economic rise and its increasing importance in global governance. This shift is also driven by shared concerns over economic coercion and the need for resilient supply chains, which became prominent during the COVID-19 pandemic and subsequent geopolitical realignments.

Looking ahead, the future implications are substantial. India could emerge as a significant alternative manufacturing base for semiconductors and a hub for AI innovation, reducing global reliance on a few concentrated regions. This partnership will likely lead to increased bilateral trade in technology goods and services, joint research and development projects, and enhanced talent exchange programs. However, challenges remain, including developing robust infrastructure, simplifying regulatory frameworks, and ensuring a steady supply of highly skilled labor. India's policies like the India Semiconductor Mission (launched in December 2021 with a financial outlay of INR 76,000 crore or approximately USD 10 billion) and the National Policy on Electronics (2019) are crucial enablers. The Digital Personal Data Protection Act, 2023, while ensuring data privacy, will also be vital in shaping the regulatory landscape for AI development. While no direct constitutional articles explicitly govern AI or semiconductors, the Directive Principles of State Policy (Articles 38, 39, 41, 43) indirectly support state efforts towards economic development, promoting scientific temper, and ensuring a decent standard of living, which are all advanced through technological progress. The Production Linked Incentive (PLI) schemes across various sectors, including electronics and IT hardware, are practical policy instruments facilitating this strategic alignment.

In conclusion, the US recognizing India as a "Highly Strategic Partner" for AI and supply chain security is a testament to India's growing technological capabilities and its pivotal role in shaping a resilient and secure global digital future. This partnership is poised to drive significant economic growth and enhance India's strategic influence on the world stage.