India and US Expand Critical Technology Initiative With New Semiconductor and AI Cooperation Agreements

Background

The Initiative on Critical and Emerging Technology, launched by President Biden and Prime Minister Modi at their June 2023 summit, was designed to build a structured framework for US-India cooperation in the technology domains most critical to strategic competition with China. The initiative identified six priority areas: semiconductors and supply chain resilience, artificial intelligence and quantum computing, defence technology and co-production, space and advanced communications, biotechnology, and clean energy. In its first two years, iCET produced a series of framework agreements and working group structures, including a commercial dialogue on semiconductor investment, a joint research programme on AI and quantum, and a defence technology cooperation framework that enabled the US government to authorise several previously restricted technology transfers to India. Critics of iCET in both Washington and New Delhi noted that despite the enthusiasm surrounding the framework's launch, concrete industrial outcomes had been limited by bureaucratic processes on both sides, Indian regulatory barriers to foreign investment in defence and technology, and US export control restrictions that made companies cautious about committing to India-based production of the most sensitive technologies. The October 15, 2026 agreements represent the most substantive output the framework has produced, reflecting reforms in both India's foreign direct investment policy and the US Commerce Department's approach to technology transfer authorisations for trusted allied partners.

The October 15 Agreements

The three agreements signed at the US-India Technology Partnership Summit in New Delhi address the three areas where iCET working groups assessed that conditions were ripe for moving from framework to operational commitments. The semiconductor supply chain agreement creates a bilateral mechanism for aligning US and Indian semiconductor industrial policies, coordinating export control applications, and facilitating US equipment and materials company investment in India's emerging chip manufacturing sector. Applied Materials announced a commitment to establishing an advanced process materials and equipment centre in the Semiconductor Complex Limited facility in Mohali, Punjab, with an investment of approximately 500 million dollars over five years, while Lam Research committed 300 million dollars to a process equipment servicing and regional engineering centre in Hyderabad. These investments are significant because they bring the equipment supplier infrastructure whose absence has been one of the practical barriers to India's semiconductor manufacturing ambitions, complementing the India Semiconductor Mission's support for fab construction by providing the ancillary technical services that fabs require to operate efficiently. The AI safety agreement establishes a Joint AI Safety Institute as a bilateral body with offices in both Washington and Bangalore, tasked with developing shared evaluation frameworks for frontier AI models, coordinating on AI hardware export control policies to prevent Chinese acquisition of advanced AI accelerators, and building compatible regulatory approaches to AI deployment in critical infrastructure. The space co-production agreement enables joint development of specific satellite components under technology sharing arrangements, with ISRO and SpaceX in discussions for a commercial launch collaboration and Maxar Technologies committed to establishing India-based satellite imaging analysis capabilities.

• Applied Materials: 500 million dollar process materials centre in Mohali under semiconductor supply chain agreement.
• Lam Research: 300 million dollar equipment and engineering centre in Hyderabad.
• Joint AI Safety Institute established with offices in Washington and Bangalore.
• Space co-production agreement enables joint satellite component development and commercial launch collaboration.

Strategic Implications and Challenges

The iCET expansion reflects the strategic logic that both India and the United States have articulated for their bilateral technology relationship: India offers a large domestic market, a growing engineering talent base, democratic governance, and strategic alignment with the US-led Indo-Pacific order, while the US offers access to frontier technologies, capital, and market connections that India's domestic ecosystem cannot yet supply at scale. The October 15 agreements test whether this strategic logic can translate into commercially viable industrial outcomes that sustain themselves beyond the diplomatic relationships that generated them. For the semiconductor investments, the question is whether US equipment companies can operate profitably in India given the country's infrastructure gaps, regulatory complexity, and the smaller scale of India's current chip manufacturing compared to the established ecosystems of Taiwan, South Korea, and increasingly the US itself. India's Semiconductor Mission has approved three fab projects since 2023, including Tata Electronics' facility in Dholera and a Micron memory testing facility in Sanand, providing an initial customer base for equipment services, but reaching the critical mass that makes India a self-sustaining semiconductor manufacturing hub will require a decade of sustained investment at a scale that goes well beyond the October 15 commitments. For AI safety, the joint institute faces the challenge of aligning two countries with different AI governance philosophies, as India has been more permissive in its approach to AI regulation and more resistant to mandatory safety standards than the EU, and only modestly aligned with the US AI Safety Institute's evaluation frameworks. The space cooperation elements are the most straightforward, building on an established track record of US-India space collaboration and addressing a sector where India's ambitions and capabilities make it a natural partner for commercial and strategic co-production.

Sources

• White House
• Reuters
• The Hindu
• US Commerce Department
• Nikkei Asia