Tariff wars and a reshaping of AI global landscape
(Source: Page 10, The Hindu)
| Topic: GS Paper 3 (Science and Tech, Economy, International Trade) |
| Context |
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Impact of Tariffs on AI Supply Chains
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U.S. tariffs as high as 27% on critical AI hardware components.
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Risk of U.S. becoming an expensive AI development hub, pushing firms abroad.
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Disruption of innovation cycles and supply chains.
Global AI Realignment
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Tariff policies causing “capital substitution” – shift towards efficiency in algorithms over hardware.
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Rise in custom AI chips (ASICs) predicted by 2028.
India’s Strategic Position
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India positioned as a “third option” in the U.S.-China tech rivalry.
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Strengths: Skilled workforce, growing semiconductor sector, favourable regulations.
Challenges for India
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Heavy dependence on imports for AI hardware.
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Need for investment in domestic fab and R&D.
Way Forward
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Continue AI-specific infrastructure development.
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Build resilient and globally integrated AI manufacturing capacity.
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Leverage regulatory flexibility and data advantage to attract global AI firms.
| Practice Question:
How are trade protectionism and tariff wars reshaping global AI supply chains? Discuss the implications and opportunities for India in this evolving landscape GS3 – 250 Words (15 Marks) |
