India - Singapore: PM Modi’s Visit - Ties Elevated to Comprehensive Strategic Partnership
STORIES, ANALYSES, EXPERT VIEWS
Prime Minister Narendra Modi arrived in Singapore Wednesday afternoon after wrapping up his visit to Brunei. He met PM Lawrence Wong over a meal. On Thursday (September 5, 2024) the two leaders held a productive meeting during which they elevated the bilateral ties to a comprehensive strategic partnership.
The meeting between the two leaders comes days after Wong took over and PM Modi began his third term as prime minister.
“I am confident,” said PM Modi “that under the leadership of 4G (the fourth-generation leaders), Singapore will progress even faster.”
“We also want to create many Singapores in India and I am happy that we are working together in this direction. The ministerial roundtable that has been formed between us is a path-breaking mechanism,” he added. PM Modi further said that the partnership between the two nations in skilling digitalisation, mobility, advanced manufacturing, semiconductors, Artificial intelligence (AI), healthcare, sustainability and cyber security has become an identity of this mechanism.
MEA note: Ahead of the talks, Modi received a red carpet-welcome at the Singapore Parliament House. “A new chapter in – ties: Comprehensive Strategic Partnership established. PM @narendramodi and PM @LawrenceWongST held a productive meeting in Singapore today,” Ministry of External Affairs (MEA) spokesperson Randhir Jaiswal said in a post on X after the meeting.
Ties elevated to Comprehensive Strategic Partnership: “The leaders agreed to elevate the – ties to Comprehensive Strategic Partnership. They extensively reviewed various facets of the bilateral relationship covering areas of Advanced Manufacturing, Connectivity, Digitalisation, Healthcare & Medicine, Skills Development and Sustainability,” he added.
The semiconductor partnership of geo-strategic and geo-economic importance
The biggest technical takeaway however, is the partnership on semiconductors. Following his bilateral meet, PM Modi, accompanied by Lawrence Wong, visited a leading Singaporean company - AEM Holdings Ltd - in the semiconductor and electronics sector and discussed ways for collaboration in the industry.
In a statement, Singapore Semiconductor Industry Association said “Given our efforts to develop the semiconductor manufacturing ecosystem in India and Singapore’s strengths in this sector, both sides have decided to expand bilateral cooperation. During the 2nd meeting of the India-Singapore Ministerial Roundtable, both sides agreed to add advanced manufacturing, with a focus on semiconductors, as a pillar for enhancing bilateral cooperation.”
Given the critical importance of semiconductor chips in virtually everything from missiles to mobile phones and from cars to computers, Shubhajit Roy (writes on Trending Topics, Opinions and Top Headlines at Indian Express) states “the pact with Singapore has great geo-strategic and geo-economic importance."
India, a late entrant: The global chip industry is dominated by companies from a very small number of countries, and India is a late entrant into this high-tech and expensive race.
The India Semiconductor Mission was launched in 2021 with a Rs 76,000 crore chip incentive scheme, under which the central government offered half the plant’s capital expenditure costs as subsidy. In February, the Cabinet approved semiconductor-related projects adding up to investments of about Rs 1.26 lakh crore.
That same month, the government announced a partnership between the Tata Group and Taiwan’s Powerchip Semiconductor Manufacturing Corporation (PSMC) to set up a semiconductor fabrication plant. The Cabinet has so far approved five semiconductor units, including four assembly units, under the incentive scheme.
Singapore, on the other hand, contributes around 10% of the global semiconductor output, along with 5% of the global wafer fabrication capacity (silicon wafer is a circular piece of ultra pure silicon, usually 8-12 inches in diameter, out of which chips are carved) and 20% of semiconductor equipment production.
Nine of the world’s top 15 semiconductor firms have set up shop in Singapore, and the semiconductor sector contributes significantly to the country’s economic growth. Singapore has players in all segments of the semiconductor value chain: integrated circuit (IC) design, assembly, packaging and testing; wafer fabrication, and equipment/ raw material production.
Challenges, opportunities: In the view from New Delhi, Roy writes “Singapore’s semiconductor industry is limited to ‘mature-node chips’ (process node technology of 28 nm or more), which are used in appliances, cars, and industrial equipment. It is not equipped to make high-end logic chips like the ones used in the AI sector (process nodes of 7 nm and smaller, requiring specialised production methods).
“As the costs of production increase, semiconductor companies are seeking to diversify some low-cost and labour-intensive operations out of Singapore. For example, Utac, a semiconductor test and assembly services provider, has moved some of its more manual and technologically dated operations to Thailand. Also, Singapore does not appear keen on following the path of countries who are offering incentives to attract semiconductor investments.”
As several countries including India work on building domestic semiconductor sectors, Roy believes “the industry in Singapore may come under pressure, especially with the increasing cost of production and the limited resources of land and labour in the country.”
Scope for collaboration: From New Delhi’s perspective, “there is scope for collaboration with Singapore in talent development, and knowledge-sharing about best practices in managing semiconductor industrial parks (called Wafer Fab Parks in Singapore).
“India’s abundant land and competitive labour costs could encourage semiconductor companies in Singapore to look at the country for their expansion plans. There is also scope for India to engage and collaborate with semiconductor equipment and material manufacturers in Singapore to develop its own semiconductor manufacturing ecosystem.”