U.S. Pursues India as a Supply-Chain Alternative to China, Wall Street Journal, Jan.31, 2023.

Afternoon Tea For You

By Vivian Salama

Biden administration turns to New Delhi as it seeks to steer critical technologies away from Beijing

The Biden ad­min­is­tra­tion is turn­ing to In­dia for help as the U.S. works to shift crit­i­cal tech­nol­ogy sup­ply chains away from China and other coun­tries that it says use that tech­nol­ogy to desta­bi­lize global se­cu­rity.

Ad­min­is­tra­tion of­fi­cials hosted meet­ings this week with a del­e­ga­tion of In­dian of­fi­cials and U.S. in­dus­try ex­ec­u­tives, seek­ing to fa­cil­i­tate tech­nol­ogy de­vel­op­ment and in­vest­ment in In­dia as part of a broader U.S. push to cul­ti­vate al­ter­na­tives to China.

Chal­lenges aris­ing from Bei­jing’s ex­pand­ing global in­flu­ence have had “a pro­found im­pact on the think­ing in Delhi just as they have had on the pro­found im­pact on the think­ing in other cap­i­tals,” White House na­tional se­cu­rity ad­viser Jake Sul­li­van told re­porters on Tues­day. “There is an ele­ment of that that forms a back­drop for the dis­cus­sions here.”

The meet­ings come on the heels of an agree­ment with Japan and the Nether­lands to start re­strict­ing ex­ports of ad­vanced chip-man­u­fac­tur­ing equip­ment to China, join­ing ef­forts by the Biden ad­min­is­tra­tion to slow Chi­na’s mil­i­tary de­vel­op­ment by cut­ting ac­cess to ad­vanced tech­nolo­gies. 

U.S. of­fi­cials hope those ex­port re­stric­tions cre­ate op­por­tu­ni­ties in In­dia and else­where. While In­dia isn’t among the world’s top pro­duc­ers of semi­con­duc­tors, New Delhi has sought to as­sert it­self as a greater semi­con­duc­tor player. In­dia is an ap­peal­ing part­ner for in­dus­tries look­ing to di­ver­sify their sup­ply sources. With a pop­u­la­tion of 1.4 bil­lion peo­ple, the coun­try has a mas­sive source of la­bor and costs are rel­a­tively low. 

On Tues­day, the ad­min­is­tra­tion hosted a task force or­ga­nized by the Semi­con­duc­tor In­dus­try As­so­ci­a­tion, which is work­ing in part­ner­ship with the In­dian Elec­tron­ics and Semi­con­duc­tor As­so­ci­a­tion, to de­velop a “readi­ness as­sess­ment,” aimed at try­ing to ac­cel­er­ate co­op­er­a­tion and in­vest­ments. The meet­ings were at­tended by top Amer­i­can ex­ec­u­tives from a range of in­dus­tries, in­clud­ing de­fense gi­ant Lock­heed Mar­tin and semi­con­duc­tor pro­ducer Mi­cron, ad­min­is­tra-tion of­fi­cials said.

In­dia’s na­tional se­cu­rity ad­viser, Ajit Doval, led New Del­hi’s del­e­ga­tion this week in meet­ings with Mr. Sul­li­van and Com­merce Sec­re­tary Gina Rai­mondo and other of­fi­cials.

The meet­ings un­der­score a broader U.S. ef­fort to meet chal­lenges from China through al­liances with other coun­tries. The Biden ad­min­is­tra­tion has given pri­or­ity to Wash­ing­ton’s re­la­tion­ship with what is known as the Quad—an al­liance be­tween In­dia, Aus­tralia, Japan and the U.S. that has fo­cused on coun­ter­ing Bei­jing.

“Pres­i­dent Biden re­ally be­lieves that no suc­cess­ful and en­dur­ing ef­fort to ad­dress any of the ma­jor chal­lenges in the world to­day…is go­ing to be ef­fec­tive with­out a close U.S.-In­dia part­ner­ship at its heart,” a se­nior ad­min­is­tra­tion of­fi­cial said.

How­ever, a num­ber of chal­lenges in re­cent months have strained re­la­tions be­tween Wash­ing­ton and New Delhi. In­dia has main­tained a neu­tral stance on the war in Ukraine and has con­tin­ued to pur­chase dis­counted oil from Rus­sia, re­buff­ing the Biden ad­min­is­tra­tion’s of­fer to re­place Russ­ian oil with U.S. sup­plies. In­stead, In­dia has in­creased its im­ports of Russ­ian crude.

Biden ad­min­is­tra­tion of­fi­cials said they un­der­stand the enor­mous do­mes­tic de­mand fac­ing In­dia and said that In­dia con­tin­ues to buy oil well be­low the price cap agreed to by al­lies late last year. 

The key, U.S. of­fi­cials said, is to of­fer In­dia al­ter­na­tives. The ad­min­is­tra­tion re­mains hope­ful that it can ween In­dia off pur­chas­ing Russ­ian mil­i­tary equip­ment by of­fer­ing in­cen­tives for it to di­ver­sify. Mr. Sul­li­van said gen­er­ally, the U.S. is do­ing that through joint pro­duc­tion and de­vel­op­ment. Top pri­or­i­ties in that ef­fort in­clude joint de­vel­op­ment of jet en­gines, ar­tillery sys­tems, ar­mored in­fantry, ve­hi­cles and mar­itime se­cu­rity. 

Gen­eral Elec­tric has just sub­mit­ted a pro­posal to the U.S. gov­ern­ment for a jointly pro­duced jet en­gine in the de­fense tech­nol­ogy space.

“This is the kind of thing where we’re look­ing to make fast and am­bi­tious progress,” Mr. Sul­li­van said.

In­dia has also ex­pressed frus­tra­tion that two years into the Biden ad­min­is­tra­tion, there re­mains no U.S. am­bas­sador. Ear­lier this month, the White House sub­mit­ted to the Sen­ate dozens of pres­i­den­tial se­lec­tions who failed to win con­fir­ma­tion last year. 

In­dia is among a num­ber of coun­tries to also call for an over­haul to the U.S. H-1B visa, a non­im­mi­grant visa that al­lows U.S. com­pa­nies to em­ploy for­eign work­ers in spe­cialty oc­cu­pa­tions that re­quire the­o­ret­i­cal or tech­ni­cal ex­per­tise. Ad­vo­cates have called for re­forms to the pro­gram, in­clud­ing an in­crease in the an­nual cap, as well as for a more sim­pli­fied process. 

The State De­part­ment has made some progress on the is­sue, but em­ploy­ers ex­pect de­lays in ob­tain­ing visas to con­tinue in some places, in­clud­ing In­dia. Vis­i­tor visas will likely also re­main prob­lem­atic.