Overview of India's Direct Investment Environment (1)

Bilateral agreements related to direct investment concluded between the Indian and Chinese governments primarily include: the Bilateral Investment Protection Agreement, the Agreement for the Avoidance of Double Taxation, the Memorandum of Understanding on Banking Cooperation, and the Five-Year Plan for Economic and Trade Cooperation. Additionally, capacity cooperation agreements covering infrastructure, energy, manufacturing, and other sectors have been signed. Furthermore, China and India have also concluded a trade agreement. 2. What is the current status of China-India cooperation in trade and investment? China is India’s largest trading partner, while India is China’s largest trading partner in South Asia. Major Chinese exports to India include electric motors, audio equipment, boilers, machinery and mechanical appliances (and their parts), organic chemicals, precious metals and articles thereof, iron and steel, iron and steel products, plastics and articles thereof, among others. Major Indian exports to China include metals and metal products, mineral products, jewelry, chemical products, textiles and textile raw materials, rubber, and plant products. Chinese enterprises’ primary investment sectors in India include telecommunications, power equipment, household appliances, steel, machinery and equipment, and construction machinery. However, the scale of such investments remains relatively small, and both investment models and sectors are rather limited. Moreover, Chinese companies are currently implementing two industrial park projects in India: the Gujarat Power Industry Park project led by Xinjiang TBEA Group Co., Ltd., and the Maharashtra Automotive Industrial Park project spearheaded by BAIC Foton.

India’s Semiconductor Boom: A ‘New Casino’ for Global Chip Giants—or the Next World Factory?

A high-stakes gamble is unfolding across South Asia. As the global semiconductor industry struggles to find a new equilibrium amid rising anti-globalization trends, India has suddenly emerged as a ‘strategic battleground’ for international chip giants. From Renesas Electronics’ $920 million investment in 3nm chip design facilities, to Foxconn’s joint venture with HCL to build a semiconductor packaging plant, and to Powerchip’s partnership with Tata to construct India’s first 12-inch wafer fab—within just two years, India’s semiconductor industry has leapt from the periphery to become a core focus area. Yet behind this frenzy lies a critical question: Is this surge driven by shrewd calculations by global corporations—or does it reflect India’s genuine industrial rise? I. Are Global Giants Rushing In? Has India’s ‘Golden Age’ of Semiconductors Arrived? In May 2025, Japanese semiconductor firm Renesas Electronics launched two 3nm chip design centers simultaneously in Noida and Bengaluru, catapulting India into the elite global club of cutting-edge chip design. As India’s first 3nm project, it targets automotive-grade chips and AI computing power markets, with mass production scheduled for 2027. To support this strategic initiative, the Indian government has already provided EDA tools to over 270 universities, and Renesas plans to expand its Indian team to 1,000 engineers by year-end. Foxconn, partnering with India’s HCL Group, is investing $450 million to establish a semiconductor packaging facility in Uttar Pradesh—aimed squarely at restructuring Apple’s supply chain. Scheduled to commence operations in 2027, this project will be built in two phases, ultimately achieving monthly output of 20,000 wafers and 36 million display driver ICs, forming a complete local industrial loop—‘chips → modules → finished devices’—alongside Foxconn’s iPhone assembly operations in India. Even more noteworthy is Powerchip’s collaboration with Tata Electronics. Together, they are constructing India’s first 12-inch wafer fab in Gujarat, with a total investment of $11 billion, monthly capacity of 50,000 wafers, and mass production expected in 2026. This project marks a milestone for India’s semiconductor manufacturing capability—and serves as a pivotal component of Powerchip’s global expansion strategy, focusing on automotive-grade chips, display driver ICs, and high-speed logic chips. II. Why Are Global Giants Collectively ‘Betting Big’ on India? The sudden surge of interest from global semiconductor leaders stems from profound strategic considerations. The most immediate driver is policy incentives: India offers the world’s most generous subsidy scheme—central government covers 50% of project costs, while state governments provide an additional 20–25%, leaving enterprises responsible for only 25–30%. For instance, Micron’s assembly and test facility received 50% central subsidies plus 20% state-level subsidies, significantly reducing its actual investment burden. Another major attraction is India’s talent pool. India supplies roughly 20% of the world’s semiconductor design talent; companies including Intel and Qualcomm…

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