Ever since President Tsai Ing-wen’s (蔡英文) government took office, it has taken a slew of measures to reinvent Taiwan’s foreign policy. One such initiative has been its New Southbound Policy, with a special focus on strengthening ties with South Asian countries. Improving ties with India has become a major priority of the Tsai government.
Since 1995, when India and Taiwan decided to establish informal ties with the opening of the India-Taipei Association (ITA) in Taipei and the Taipei Economic and Cultural Center (TECC) in New Delhi, the two countries have fostered cooperation in a number of areas.
Economic ties have emerged as the linchpin of this improving relationship. In 2002, the directors of the ITA and the TECC signed an agreement on promotion and protection of investments. In 2006, the Taiwan-India Cooperation Council, a private organization, was established in Taipei. The two nations signed a double taxation avoidance agreement and a customs cooperation agreement in 2011.
In 2007, the ITA and TECC signed a memorandum of understanding on behalf of the Indian Ministry of Science and Technology’s Department of Science and Technology and the National Science Council. A pact signed in December last year institutionalizing cooperation in areas including engineering, manufacturing, and research and development should further boost their engagement in this field.
With the aim of promoting industrial technical cooperation and business, the two sides last year signed a memorandum on the promotion of industrial collaboration.
New Delhi and Taipei have also signed an air services agreement and a memorandum on agricultural cooperation to boost their ties in these areas.
The Taiwan External Trade Development Council and Taipei Computer Association have established offices in Mumbai, Chennai, Kolkata and Bengaluru to promote trade activities and explore collaboration opportunities.
These and other efforts to institutionalize economic ties have increased the volume of bilateral trade from US$1.2 billion in 2000 to US$6.3 billion last year, and Tsai’s New Southbound Policy, along with Indian Prime Minister Narendra Modi’s Act East Policy, could play a vital role in deepening economic ties between the two nations.
This is evident from the fact that in 2014, the India Electronics and Semiconductor Association and Taipei Computer Association on signed a memorandum to promote local manufacturing in the field of semiconductors and electronics.
In August 2015, Hon Hai Precision Industry Co, known abroad as Foxconn, one of the largest hardware manufacturers in the world, announced an investment of US$5 billion in India.
The first Taiwan Expo was held in at the Pragati Maidan, New Delhi, from May 17 to May 19. A total of 130 Taiwanese exhibitors showcased their latest technologies, products and services in the exhibition area, with products ranging from the information and communication technology, electric vehicles, auto parts and fasteners to medical devices, health and personal care, textiles, food and beverage and home products.
The Institute for Information Industry has joined India’s Center of Excellence in Wireless and Information Technology to develop 4G broadband wireless technologies and products.
Over the past 10 years Acer, D-Link Corp and Transcend have invested about US$1 billion in India, and China Synthetic Rubber has expressed the desire to invest about US$330 million in the state of Andhra Pradesh.
China Steel has also proposed to make a US$180 million investment in India.
CPC Corp, Taiwan, has proposed a US$6 billion investment in India, which would surely boost the Make in India program in the petrochemical industry.
Of course, the two sides have their own reasons to transform the bilateral ties.
Given its huge foreign reserves and expertise in the fields of hardware manufacturing, construction, infrastructure, mine exploration, electronic manufacturing, logistics, automobiles, food processing and others, Taiwan could play a vital role in the success of the Modi government’s Make in India, Digital India and Skill India initiatives.
For instance, if India’s expertise in software and Taiwan’s expertise in hardware came together, it would be beneficial to both sides.
At the same time, by providing a big market, India could significantly reduce the economic ties between China and Taiwan, a stated goal of Tsai’s administration as part of the New Southbound Policy. Meanwhile, with the use of Taiwan’s agrotechnology, India could transform its agriculture as well.
For Taiwan, the Indian market offers a timely opportunity to invest at a time when China has become increasingly aggressive against it, but accounts for 40 percent of Taiwan’s exports. Robust trade with India would help Taiwan to reduce its economic dependency on China.
As the Indian government is focused on domestic production of electronics and Taiwan’s capabilities in this field are world-renowned, it need be second to none in making inroads into this sector of the Indian economy.
At the same time, the nations should also focus on taking more initiative to strengthen ties, especially in the economic sphere. They should consider signing a free-trade agreement.
People-to people engagement through conferences, exchange programs and other means should be increased. The number of direct flights should be increased between the two countries.
These and other efforts will surely bring India-Taiwan economic ties to a new height.
Sumit Kumar is a Ministry of Foreign Affairs visiting fellow at National Chengchi University in Taipei and a research fellow at the Chennai Center for China Studies in India.
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