India’s chip making programme has been facing some challenges. The objective was to attract global chip manufacturers to India at time that international companies were looking to diversify their supply chains out of China. However, as US-China tensions have aggravated, the US formulated a new industrial policy which included the CHIPS Act of 2022. This includes billions of dollars of subsidies for chip manufacturing on US soil along with investment tax credits for costs of manufacturing equipment, with the primary aim of countering China. Chips manufacturers are therefore first prioritising investments in USA. However, Ashwini Vaishnaw Minister for Electronics and IT has recently visited US and met many companies in the context of creating a semiconductor ecosystem, is still optimistic. For this weekend we have 2 articles - first from Reuters on the challenges India has been facing and the second an interview with Mr Vaishnaw who believes India’s plans are on track. Meanwhile, the India Semiconductor Mission (ISM) has invited fresh proposals for its USD10 billion chip-subsidy plan.

1.Big companies including a Foxconn joint venture that bid for India's semiconductor incentives are struggling due to the lack of a technology partner, a major setback for India’s chipmaking ambitions, opines an article in Reuters.

“A planned $3 billion semiconductor facility in India by chip consortium ISMC that counted Israeli chipmaker Tower as a tech partner has been stalled due to the company's ongoing takeover by Intel.

A second mega $19.5 billion plan to build chips locally by a joint venture between India's Vedanta and Taiwan's Foxconn is also proceeding slowly as their talks to rope in European chipmaker STMicroelectronics as a partner a deadlocked.”

2. However, the Electronics and IT minister Ashwini Vaishnaw, in an interview with Economic Times, who has just returned from US, says that many players are looking at India as next chip-making destination.
   

   “The size of this industry is going to double in the next seven years - from current $650 billion to over 1 trillion. In the next seven years, industry will need over one million qualified and talented people to work in these semiconductor industries. India will become the semiconductor capital due to a variety of factors. And for that, we have to make sure that the ecosystem is in place by the time the first fabrication unit comes along. Our focus has been on creating the ecosystem.

   Some major players are looking at India as the next destination. Certainly, some players would like to come in the value addition category to begin with and then come with the fabrication part.”

   Read more at:

   https://economictimes.indiatimes.com/tech/technology/major-players-looking-at-india-as-next-chip-making-destination-it-minister-ashwini-vaishnaw/articleshow/100686401.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

3.The world is finally spending more on solar than oil production, according to annual investment report of the International Energy Agency, as reported by MIT Technology Review.

"The International Energy Agency just published its annual report on global investment in energy. The world saw about $2.8 trillion of investments in energy in 2022, with about $1.7 trillion of that going into clean energy. That’s the biggest single-year investment in clean energy ever.

Let’s start with what I consider to be good news: there’s a lot of money going into clean energy—including renewables, nuclear, and things that help cut emissions, like EVs and heat pumps. And not only is it a lot of money, but it’s more than the amount going toward fossil fuels. In 2022, for every dollar spent on fossil fuels, $1.70 went to clean energy. Just five years ago, it was dead even.

Clean energy’s growing dominance is especially clear when it comes to solar power. In 2023, for the first time, investment in solar energy is expected to beat out investment in oil production. It’s a stark difference from what the picture looked like a decade ago, when oil spending outpaced solar spending by nearly six to one.”

4. Rajesh Rajagopalan, author and professor of International Politics at JNU, in an interview with Scroll, says we are living in a bipolar age and it is dangerous for India to think otherwise.

   Rajesh Rajagopalan, is author of Second Strike: Arguments about Nuclear War in South Asia. Many may not agree with his views but they are worth considering. Some excerpts:
   

   “If we think it’s a multipolar world, then we think that there are many other powers we can partner with. [But] in a bipolar system in which one of the polar systems is a neighbour, we have only the other polar power to partner with, the US. There is a practical, political consequence to saying it is multipolar and that there are multiple other powers we can partner with. If it’s a multipolar world, we don’t really have to partner with the US. We can partner with Japan, France, Germany, Europe, whoever we think the other powers are.

   To some extent, we have been looking for these partnerships, not to give up on the US, but to reduce the centrality of the US. But if its a bipolar system, then it’s only the US, really speaking, who can provide us with the support that we need, because others are not capable enough. In that sense, if we think it’s multipolar and go around looking for all these partners, who we think are capable but aren’t actually, then in a crunch it could potentially become dangerous, and lead to minimising our partnership with the US. France, Germany and all are really not capable of helping India balance against China alone. If you think that they are, and that it’s a multipolar world, then we are in for a bit of shock.”

5.The Economist has an interesting cover feature on the baby bust economy -how declining birth rates will change the world. It is long and worthwhile read.
“In the roughly 250 years since the Industrial Revolution the world’s population, like its wealth, has exploded. Before the end of this century, however, the number of people on the planet could shrink for the first time since the Black Death. The root cause is not a surge in deaths, but a slump in births. Across much of the world the fertility rate, the average number of births per woman, is collapsing. Although the trend may be familiar, its extent and its consequences are not. Even as artificial intelligence (AI) leads to surging optimism in some quarters, the baby bust hangs over the future of the world economy.

The result is that in much of the world the patter of tiny feet is being drowned out by the clatter of walking sticks. The prime examples of ageing countries are no longer just Japan and Italy but also include Brazil, Mexico and Thailand. By 2030 more than half the inhabitants of East and South-East Asia will be over 40. As the old die and are not fully replaced, populations are likely to shrink. Outside Africa, the world’s population is forecast to peak in the 2050s and end the century smaller than it is today. Even in Africa, the fertility rate is falling fast.

Whatever some environmentalists say, a shrinking population creates problems. The world is not close to full and the economic difficulties resulting from fewer young people are many. The obvious one is that it is getting harder to support the world’s pensioners. Retired folk draw on the output of the working-aged, either through the state, which levies taxes on workers to pay public pensions, or by cashing in savings to buy goods and services or because relatives provide care unpaid. But whereas the rich world currently has around three people between 20 and 64 years old for everyone over 65, by 2050 it will have less than two. The implications are higher taxes, later retirements, lower real returns for savers and, possibly, government budget crises.

Low ratios of workers to pensioners are only one problem stemming from collapsing fertility. Also, younger people have more of what psychologists call “fluid intelligence”, the ability to think creatively so as to solve problems in entirely new ways .

This youthful dynamism complements the accumulated knowledge of older workers. It also brings change. Patents filed by the youngest inventors are much more likely to cover breakthrough innovations. Older countries—and, it turns out, their young people—are less enterprising and less comfortable taking risks. Elderly electorates ossify politics, too. Because the old benefit less than the young when economies grow, they have proved less keen on pro-growth policies, especially housebuilding. Creative destruction is likely to be rarer in ageing societies, suppressing productivity growth in ways that compound into an enormous missed opportunity.

All things considered, it is tempting to cast low fertility rates as a crisis to be solved. Many of its underlying causes, though, are in themselves welcome. As people have become richer they have tended to have fewer children. Today they face different trade-offs between work and family, and these are mostly better ones. The populist conservatives who claim low fertility is a sign of society’s failure and call for a return to traditional family values are wrong.More choice is a good thing, and no one owes it to others to bring up children.

Liberals’ impulse to encourage more immigration is more noble. But it, too, is a misdiagnosis. Immigration in the rich world today is at a record high, helping individual countries tackle worker shortages. But the global nature of the fertility slump means that, by the middle of the century, the world is likely to face a dearth of young educated workers unless something changes.

What might that be? People often tell pollsters they want more children than they have. This gap between aspiration and reality could be in part because would-be parents—who, in effect, subsidise future childless pensioners—cannot afford to have more children, or because of other policy failures, such as housing shortages or inadequate fertility treatment. Yet even if these are fixed, economic development is still likely to lead to a fall in fertility below the replacement rate. Pro-family policies have a disappointing record. Singapore offers lavish grants, tax rebates and child-care subsidies—but has a fertility rate of 1.0.

Unleashing the potential of the world’s poor would ease the shortage of educated young workers without more births. Two-thirds of Chinese children live in the countryside and attend mostly dreadful schools; the same fraction of 25- to 34-year-olds in India have not completed upper secondary education. Africa’s pool of young people will continue to grow for decades. Boosting their skills is desirable in itself, and might also cast more young migrants as innovators in otherwise-stagnant economies. Yet encouraging development is hard—and the sooner places get rich, the sooner they get old.

Eventually, therefore, the world will have to make do with fewer youngsters—and perhaps with a shrinking population. With that in mind, recent advances in AI could not have come at a better time. An über-productive AI-infused economy might find it easy to support a greater number of retired people. Eventually AI may be able to generate ideas by itself, reducing the need for human intelligence. Combined with robotics, AI may also make caring for the elderly less labour-intensive. Such innovations will certainly be in high demand.

If technology does allow humanity to overcome the baby bust, it will fit the historical pattern. Unexpected productivity advances meant that demographic time-bombs, such as the mass starvation predicted by Thomas Malthus in the 18th century, failed to detonate. Fewer babies means less human genius. But that might be a problem human genius can fix.8