Pax Silica and India's Involvement
The US-led strategic bloc, Pax Silica, is inviting India to join its efforts in securing resilient supply chains for silicon, semiconductors, AI infrastructure, and critical minerals. Launched in December, this initiative aims to diversify dependencies away from China and includes members like Japan, South Korea, the UK, Israel, and Singapore, with recent additions of Qatar and the UAE.
Significance for India
- Trade Disruptions: The pandemic revealed risks of over-reliance on a single supplier, as demonstrated by China's restrictions on rare-earth exports affecting Indian manufacturers.
- Rare-Earth Dependency: Despite having 8.5 million tonnes of reserves, India imports about 93% of its rare-earth requirements from China.
- Complementary Strengths: The bloc combines US and Japan's technology, South Korea's chip manufacturing, the Netherlands' lithography, and Australia's critical mineral supplies.
India's Initiatives and Challenges
- Semiconductor Ecosystem:
- Under the India Semiconductor Mission, the government approved 10 projects worth ₹1.6 trillion with incentives of ₹76,000 crore.
- Efforts include fabrication units, semiconductor plants, and 23 chip-design projects.
- Investments from global firms like Micron and Indian companies like Tata group are noteworthy.
- Value Proposition: India's digital infrastructure, large domestic market, and growing AI ecosystem offer substantial scale.
- Geopolitical to Industrial Conversion: Challenges include high capital needs, stable power, water resources, and environmental safeguards.
Strategic and Economic Implications
- Access and Membership Benefits: Pax Silica offers technology, finance, and market access but requires domestic reforms and regulatory clarity.
- Supply Chain Alignment: Global chains are bifurcating between China-led and Pax Silica-led systems, necessitating careful navigation by India.
In summary, while strategic alignment with Pax Silica can open doors for India, sustained competitiveness will ultimately depend on effective execution and domestic industry support.
