In the past few months, the escalation of the China-India conflict has warmed up Taiwan’s relations with India, and the possibility of bilateral trade negotiations between Taiwan and India has also surfaced. What is the next step in the Taiwan-India relationship, and which direction will it take?
“The Taiwan-India relationship is better than ever,” Gourangalal Das, president of the Indian Taipei Association, said in a speech at the Taiwan-India Industry Linkage Summit on Oct. 22 that an increasing number of Taiwanese companies have operational bases in India and have made significant investments in information and communications technology, automotive components, machinery, steel, electronics and construction. “I think the next phase of the Taiwan-India relationship is very exciting, and Taiwan can play a very active role in India.”
Indeed, from the economic and trade level, at the beginning of October this year, the Indian Ministry of Electronics and Information Technology examined and approved 16 electronics companies to apply for the “Large Scale Electronics Manufacturing Production Linkage Incentive Scheme (PLI Scheme)”, in which the Indian official named international cell phone manufacturers including Samsung, Foxconn Hon Hai. Rising Star (a Hon Hai company), Wistron, and PEGATRON. With the exception of Samsung, the other four companies are from Taiwan.
In response to Indian Prime Minister Narendra Modi’s policy goal of “Make in India,” the Indian government has also launched the Program for the Manufacture of Electronic Components and Semiconductors (SPECS),” “The National Institute of Standards and Technology (NIST),” and “The National Institute of Standards and Technology (NIT). Incentives such as the Electronics Manufacturing Cluster 2.0 (EMC2.0) program are expected to bring more foreign investment in the electronics industry to India. The impact of the U.S.-China trade war and COVID-19, these Taiwanese companies investing in India or Southeast Asia to set up factories, also draws attention to Taiwan’s role in the global supply chain restructuring trend.
In his speech at the Taiwan-India Industry Linkage Summit on October 22, Taiwan’s Vice Minister of Economic Affairs, Mr. Chen Zheng-Qi, emphasized, “President Tsai mentioned that the rapid dismantling and restructuring of global supply chains is an irreversible trend. We anticipate more opportunities for Taiwan-India cooperation under this trend.” He said that many Taiwanese businesspeople are optimistic about India as a new production base, and also expect the cumulative amount of Taiwanese investment in India to exceed $900 million in the near future.
At the trade level, India is Taiwan’s 17th-largest trading partner, and Taiwan-India trade will total about $5.8 billion in 2019. At the investment level, India and Taiwan signed a Taiwan-India bilateral investment agreement at the end of 2018, and according to the Investment Commission of Taiwan’s Ministry of Economic Affairs, the cumulative value of Taiwan’s investment in India has exceeded $800 million in all previous years; since 2016, Taiwan’s investment cases in India have exceeded the sum of the past 20 years combined.
For example, Taiwan IC design company MediaTek has invested more than $350 million in India, and also held a training course for executives in the telecommunications industry to train high-level talent for India; Taiwan power supply manufacturer Delta Electronics has also set up a third factory and R&D center in India, and is expected to invest more than $500 million in India by 2026.
However, there are still many Taiwanese businessmen who have reservations about moving forward in India. India hopes to attract investment in the PCB circuit board industry, for example, a Taiwan circuit board manufacturer executives told the Voice of America, the circuit board needs a lot of peripheral industry chain support, including from mechanical and electronic to chemicals, the current Indian support is very inadequate, it will take some time to brew.
The cultural background, lifestyle, and management model are actually challenges for Taiwanese businessmen,” Chiang Ming-chun, manager of Taiwan’s Chinatrust Bank in India, said at the 22nd Forum.
In the wake of recent disputes between India and China, Bloomberg News reported on October 20 that support within the Indian government for formal trade talks between Taiwan and India has been growing over the past few months. Bloomberg even quoted an Indian official as saying that a trade agreement with Taiwan would help India seek investment in the technology and electronics sectors.
Taiwan’s Foreign Minister Wu Zhao-xie also said in an interview with Indian media on October 21 that Taiwan and India can deepen future economic and trade investment and cooperation in the high-tech industry supply chain, which is in line with bilateral economic and trade interests. He also stressed that the FTA (Free Trade Agreement) between Taiwan and India can definitely enhance mutual economic relations.
However, Joe Thomas Karackattu, an assistant professor in the Department of Humanities and Social Sciences at the Indian Institute of Technology Madras (IIT Madras), who has been studying Taiwan-India economic and trade relations for many years, told VOA in an interview that India is currently a bit pro-Taiwan because it is anti-China. However, the relationship between India and Taiwan should not be “symbolic” and purely government-to-government, but should be more focused on long-term cooperation and exchange in education, culture and economy.
For example, if the Indian government wants to attract Taiwanese businessmen to invest, it should be able to propose longer-term programs, such as setting up schools for Taiwanese businessmen to send their children to. “I think the Taiwan-India relationship should be about friendship between people, a strong economic partnership, and Taiwanese businessmen should be able to find a friendly environment to invest in India and even stay in India.”
“The Taiwan-India relationship should be built on their own strong foundation, and if it’s just based on China’s deteriorating relationship with India, it may not be very successful in the long run,” Kodoju said.
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