New Delhi— As Southeast Asia emerges as a key player in the global semiconductor and rare earth mineral industries, India is poised to play a significant role in reshaping trade and supply chain networks — particularly as U.S. tariff tensions intensify.
While no single move can overturn decades of Chinese dominance, a combination of U.S. defense funding, European Union market regulations, Japan’s resource diplomacy through the Japan Organisation for Metals and Energy Security (JOGMEC), and India’s own exploration efforts is already altering the regional supply map, according to a new report by the Politeia Research Foundation (PRF), a non-profit initiative.
The report notes that “countries that combine capital, creativity, and credible standards stand the best chance of navigating the rare-earth era without succumbing to strategic chokeholds.”
India’s ongoing renegotiation of the ASEAN–India Trade in Goods Agreement (AITIGA) could significantly shift trade and supply chain flows between India and Southeast Asia, the report said. Currently, India offers duty concessions on 71 percent of its tariff lines, while ASEAN members provide less access — with Indonesia opening only 41 percent of its tariff lines, Vietnam 66.5 percent, and Thailand 67 percent. This imbalance has contributed to India’s trade deficit with ASEAN soaring from $5 billion in 2010–11 to $43.57 billion in 2022–23, with semiconductors making up a substantial portion of imports.
The report, authored by lawyer and policy consultant Madhav Maheshwari, highlights Singapore, Malaysia, and Thailand as major trade partners. It cites the India–Singapore Comprehensive Strategic Partnership, signed in September 2024, which includes an MoU on semiconductor ecosystem cooperation aimed at countering Chinese dominance while giving Singapore greater access to India’s expanding market.
Malaysia, with $20 billion in bilateral trade in 2023–24, may also need to offer greater market access during renegotiations, the report suggests. Vietnam remains a key competitor for India as a manufacturing hub, while Thailand and Indonesia are actively positioning themselves as alternatives to China-dependent supply chains.
The PRF report also identifies opportunities for India to help break China’s rare earth processing monopoly, particularly in Myanmar. It urges both India and Southeast Asian nations to increase investment in Myanmar’s resource sector.
Initiatives like the G7 Critical Minerals Action Plan, supported by Australia, India, and South Korea, could expand targeted assistance for Southeast Asia’s processing capabilities and infrastructure development, the report said, adding that ASEAN’s strategic role in global semiconductor trade underscores the urgency of diversifying away from China-centric supply chains. (Source: IANS)
