The geopolitical tensions between the US and China disrupted supply chains after sanctions against ZTE and Huawei. The global pandemic and lockdown restrictions further added to the woes, creating a supply-demand imbalance along with other challenges. As smartphone and PC makers, automobile companies and other businesses heavily rely on Taiwan, South Korea and China for critical components and manufacturing, there is a risk in having such a consolidated supply chain.

Manufacturers are now looking to diversify their supply chains to ensure events like COVID-19, natural disasters and geopolitical tensions don’t cause disruption. To encourage domestic manufacturers to increase production, the Indian government has introduced the Performance Linked Incentive (PLI) scheme. It offers incentives to companies for increasing domestic production and reducing import bills. With this scheme, the government is also trying to position India as a critical electronics manufacturing hub.

The ongoing semiconductor shortage has also convinced the US that it too heavily relies on foreign manufacturing for domestic semiconductor needs. To overcome the issue and also protect its economy, the US government has also taken a similar approach as India to leverage its technological prowess in AI, semiconductor design, and more. It will be offering subsidies of up to $52 billion for chip manufacturing in the US.

In the latest episode of ‘The Counterpoint Podcast’, host Maurice Klaehne is joined by research analyst Priya Joseph and research associate Matthew Orf to discuss how geopolitical tensions have disrupted global supply chains. The discussion focuses on India’s PLI scheme where Priya talks about its framework, major companies that are participating, and more. Matthew, on the other hand, talks about the Biden administration’s efforts to review the supply chains for critical products, such as semiconductors, and touches upon the US Innovation and Competition Act of 2021 that was passed by the Senate recently.

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Read the podcast transcript here.

Podcast Chapter Markers

1:37: What convinced the Indian government to introduce a scheme like PLI?

3:32: Is PLI restricted to any sector?

4:17: Which are the major companies participating in the scheme?

5:36: The US government is also encouraging the domestic manufacturing of semiconductors. Is it like the PLI scheme or different?

8:15: President Biden recently issued an executive order to review supply chains. Can you tell us more about it?

11:52: Has component shortage affected PLI or its participants?

13:57: There is a possibility of a third wave of COVID-19 coming to India. So, what are the challenges PLI could face with that?

17:02: The US Senate recently passed the US Innovation and Competition Act. How will it help the US fulfill its ambitions of self-sufficiency?

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