U.S. Pursues India as a Supply-Chain Alternative to China
Biden administration turns to New Delhi as it seeks to steer critical technologies away from Beijing
3 min
WASHINGTON—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 destabilise 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 organised 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, administration 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, armoured 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 defence 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.
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The recent budget has forced a reckoning for property investors.
Negative gearing now restricted to new residential builds, the CGT discount gone and on paper, the numbers look different.
And many investors are responding by pivoting toward yield, prioritising cash flow over capital growth in a way that property strategists say misses the point entirely.
“The debate has shifted to yield versus growth as if they are opposing forces,” says Abdullah Nouh, founder of Melbourne-based buyers’ agency Mecca Property Group. “But that framing is itself the mistake.”
Nouh, who works with high-net-worth families and investors on long-term acquisition strategy, argues that capital growth remains the primary driver of genuine wealth creation and that the post-budget environment has made quality assets more important, not less.
The numbers make his case plainly. An additional $500 per week in rental income is welcome. A prestige asset appreciating by $1 million over a market cycle is transformative.
These are not equivalent outcomes, and portfolios built around yield at the expense of location and land value tend to generate income while wealth stands largely still.
The more nuanced shift Nouh is seeing among sophisticated investors is a move toward assets where both outcomes can be engineered simultaneously – established homes on substantial land in quality locations, where the existing dwelling can be repositioned, rental returns improved, and the underlying land value compounds independent of what sits on it.
For investors with existing equity, commercial property is also entering the conversation in a more serious way.
Prestige industrial assets, medical centres and long-leased essential retail offer income profiles that residential property in most capital city markets cannot currently match: longer lease terms, tenants covering outgoings, and greater predictability than the residential tenancy cycle.
“The investors who build lasting wealth are rarely the ones who chased yield or growth exclusively,” says Nouh.
“They are the ones who built a strategy they could sustain – one that generated enough income to hold quality assets through multiple cycles while those assets compounded in value.”
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