The State Bank of India has raised US$300 million from the Taiwanese market through a maiden issue of Formosa bonds at a coupon rate of 2.49 percent. The issuance attracted a wide range of investors, such as supranational agencies, asset managers, private bankers and financial institutions. Meanwhile, the Indian government has also started talks with Taiwan on a free-trade agreement.
These developments would normally have been treated as a routine affair between India and Taiwan, but as the countries do not enjoy formal ties, and India has in the past remained hesitant to sign a free-trade agreement with Taiwan, the activities underscore a profound shift in New Delhi’s policy toward Taipei. More to the point, the successive governments before Indian Prime Minister Narendra Modi tried to foster ties with Taiwan in a closet due to their fear of China.
Now, India has taken several bold initiatives to openly acknowledge its ties with Taiwan. One such decision was of course to invite Taiwan’s ambassador to Modi’s swearing-in ceremony. Taiwan’s de facto embassy in New Delhi has also been given more public space.
The Indian political leadership’s new approach toward Taiwan has inadvertently encouraged Indian print and electronic media to focus on the relationship between the nations.
Moreover, there is a strong opinion among Indian experts, former diplomats and the general public that India should take initiatives to consolidate and improve ties with Taiwan.
This is a silver lining, because one of the challenges that the two sides continue to face is a lack of public awareness about each other.
The nations have also taken steps to foster cooperation in education and research. For example, the Ministry of Science and Technology and the Indian Council of Social Sciences signed an agreement enabling researchers of the two countries to work together on major projects of bilateral benefit.
It is not a coincidence that India has inched toward enhancing ties with Taiwan. There are several factors responsible for the change in public and political perception about Taiwan. China is of course a major common factor for the two countries.
While New Delhi and Taipei are facing major security threats from the Chinese communist regime, this is the first time that Taiwan, under President Tsai Ing-wen’s (蔡英文) leadership, and India, under Modi’s, have strongly positioned themselves against China, and have shown the desire to move beyond the shadow of Beijing in expanding their bilateral cooperation. While Taiwan has assumed a place in India’s Act East Policy, the Tsai government attaches huge importance to India in its New Southbound Policy.
It is also a hard truth that except for some political, economic and education initiatives, India has not made an effort to institutionalize the relationship. In turn, the nations’ ties suffer from inconsistency and unpredictability.
Learning from the US and even Lithuania, India should attempt to build political relations at some level. This would not only infuse trust in the relationship, but would also bolster Taiwan’s image as a flourishing democracy in Asia. India helping Taiwan would enhance New Delhi’s status among Asian nations and other countries.
India should also consider institutionalizing cooperation in several areas of common interest. One such area is bilateral trade and commerce.
While India and Taiwan view economic ties as the linchpin of their cooperation, the volume of bilateral trade has only marginally increased from US$6.4 billion in 2011 to US$7.5 billion in 2019. This underscores the need for the two sides to make serious efforts to realize the full potential of economic cooperation.
With Taiwan and India desperately trying to reduce their bilateral trade and commerce with China, the two countries can prove to be beneficial for each other in several ways. For example, between April 2019 and February 2020, imports from China were 1.42 trillion rupees (US$19.04 billion) or 40 percent of India’s total imports of electronics.
As a major exporter of electronics, including semiconductors, Taiwan holds huge importance for India. Cooperation between the two would not only reduce India’s dependability on China, but would also enable it to develop a safe and secure 5G network.
On the other hand, Taiwan would have access to India’s large market. Through India, Taiwan could easily expand its presence in other South Asian countries with which China has close relations.
It is equally important that India not merely see ties with Taiwan through a bilateral lens, but from a broader perspective. Enhanced economic ties between the countries would prove to be crucial in building robust global supply chains outside of China. Based upon this reasoning, India has realized the necessity of having a free-trade agreement.
While in a significant development the Indian Space Research Organization and the Indian Institute of Space Science and Technology are collaborating with Taiwan’s National Space Organization in launching a cubesat into space this month, it is imperative that the two countries work together on space exploration for civil and military purposes.
Taiwan and India should establish a joint working group to explore possibilities for enhanced cooperation, promote understanding of government policies and procedures, and facilitate collaboration by addressing issues promptly.
Closer cooperation in international initiatives, such as the Group on Earth Observations as well as efforts to develop a multiple hazards early warning and response system, would serve national objectives on both sides.
Another area of cooperation that India and Taiwan should explore is green energy. As India, an energy deficient country, tries to increase the contribution of green energy to its total energy consumption, Taiwan, a major Asian green energy giant, can play a pivotal role in this regard.
The time has come for India and Taiwan not only to accelerate the pace of cooperation in areas such as trade and commerce, and people-to-people engagement, but also aim for bilateral engagement in new areas.
Sumit Kumar is a former Ministry of Foreign Affairs visiting fellow at National Chengchi University and a post-doctoral fellow at the Indian Council of Social Sciences.
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