India-Taiwan relations on
the upswing


There seems to be renewed activity on the India-Taiwan front after two years of pause because of Covid. Taiwan’s Deputy Minister of Economic Affairs, Chen Chern-Chyi is arriving in India for the annual deputy ministerial dialogue. Chen is coming with a large delegation of primarily IT companies, which is significant given that India is starting to build a semiconductor manufacturing ecosystem and Taiwan is a leader in this area. Reports are that Chen’s visit will see discussions on Taiwanese investment in India’s semiconductor sector, apart from renewing talks on a free trade agreement between the two countries, as well as discussions on supply chain resilience. Even though India, like the majority of the world, does not recognise Taiwan as a sovereign country, but that has not stopped trade ties between the two countries from picking up pace in the last decade. Both Prime Minister Narendra Modi’s Act East policy and Taiwan President Tsai Ing-Wen’s Southbound Policy are helping inject life in this process. Even then the quantum of trade between these two countries is too small at $5.7 billion, in 2020, which is minuscule given the potential. Taiwan is a technological powerhouse and can give India unrestricted access to technology in areas such as artificial intelligence, computer hardware and semi-conductors. We should not forget the role that Taiwan has played, in spite of its small size, in the economic advancement of China. Taiwan’s technology companies have invested around $480 billion in China. Taiwan is a powerhouse in IT hardware equipment and much of China’s expertise in this area is courtesy the Taiwanese companies. Some of the biggest computer names in the world are Taiwanese: Acer, Asus, HTC, Foxconn (in collaboration with Apple), Qanta Computer, Pegatron etc. The present value of Taiwan’s investment in China is calculated to be in the range of $1 trillion. And a large part of that investment is seeking to move out of Taiwan as a consequence of Xi Jinping’s policies—policies that are seemingly taking a turn for the worse, if Xi’s latest Zero Covid diktats are anything to go by. In the latest case of barbarism, iPhone’s largest assembly factory in China, owned by Foxconn, has been put under stringent lockdown in the city of Zhengzhou. Videos have emerged of workers fleeing the factory by jumping across the fence. This has to be read in conjunction with the report that the Tata group is increasing its workforce by 45,000 at its plant in Karnataka to manufacture iPhone parts. Media reports say that the Tata group is talking to Wistron, another Taiwanese company, about assembling iPhones in India. Already, Foxconn has started assembling iPhone 14 near Chennai as it looks towards shifting more production out of China. Post the Covid induced disruptions in Chinese manufacturing, a lot of focus is being given to supply chain resilience and the trend of moving out of China will continue—slowly at first. The West in particular is getting increasingly wary of buying anything manufactured in China. So which country is ready for that investment? India has the natural advantage of being a big landmass, with huge human resources at its disposal. It has a far greater ability to absorb a large portion of this investment, unlike smaller countries like Vietnam and others in the ASEAN. India just has to provide a better ecosystem to the companies setting up shop here.
It is in this context that the Taiwanese minister’s visit is so important. China is not going to be happy with the visit, but that is China’s problem. Just because China shows Arunachal Pradesh as its territory, has India given up its claim on that particular state? It hasn’t. So China’s unhappiness should not be a roadblock in the enhancement of India-Taiwan ties. In fact post the Taiwanese deputy minister’s visit, India too should send a high-level delegation to Taiwan. It’s hoped that Taiwan too will send a more senior minister to India the next time. The message must go out that democracies stand together and no amount of bullying by China will be able to reverse the positive trajectory that India-Taiwan relations have taken.
Joyeeta Basu