Trade ties and Chinese threat bring India, Taiwan closer

Over the last few years the India-Taiwan relationship has improved significantly in the fast changing regional security environment.

While the genesis of India-Taiwan relations can be traced to pre-independent India, the two countries formed unofficial relations in 1995 with the establishment of the India-Taipei Association (ITA) in Taipei. In 2002, the directors of the India-Taipei Association (ITA) and the Taipei Economic and Cultural Center (TECC) signed the Agreement on Promotion and Protection of Investment. In 2006, the Taiwan-India Cooperation Council (TICC), a private organisation, was established in Taipei. The two countries signed the Double Taxation Avoidance Agreement and the Customs Cooperation Agreement in 2011. In 2004, Taiwan began offering the Taiwan Scholarship and Mandarin Scholarship (National Huayu Enrichment Scholarship) to Indian students. Airlines started direct flights between New Delhi and Taipei in 2003. In 2007, the ITA and the TECC signed an MOU on behalf of India’s Department of Science and Technology (DST) under the Ministry of Science and Technology and Taiwan’s NSC. These developments have in turn expanded the relationship between the two countries in a number of areas including economic, tourism, science and technology.

When the Modi government came to power, the Indian government showed its intent to deepen the engagement with Taiwan under its ‘Act East Policy’. Consequently, Deputy Minister of Economic Affairs of Taiwan was invited to attend the ‘Vibrant Gujarat’ conference in 2015. The victory of the DPP candidate, Tsai Ing-wen, in the presidential election in 2016 increased the prospect of cementing ties between the two countries. Despite China’s objection, the Indian government’s decision to host delegation of three women MPs from Taiwan in February was further seen as a big move towards firming up the bond, especially when India-China ties are going through an extremely bad phase.

Of course, both the countries have their reasons to accelerate bilateral ties. One area is their bilateral economic and trade engagement. While trade between the two countries has increased from $$1.2 billion in 2000 to $$6 billion in 2016, with nearly 90 Taiwanese companies working in different sectors of the Indian economy, the Tsai government’s ‘New Southbound Policy’ along with Modi government’s ‘Act East Policy’, can play a vital role in deepening economic ties between the two countries. This can be gauged from the fact that in August 2015, Taiwan-based Foxconn, one of the largest hardware manufacturers in the world, announced an investment of $$5 billion in India. Given its huge foreign reserves and expertise in the field of hardware manufacturing, construction, infrastructure, mine exploration, electronic manufacturing, logistics, automobiles, food processing and others, Taiwan can play a vital role in the success of the Modi government’s ‘Make in India’, ‘Digital India’, and ‘Skill India’ initiatives. On the other hand, India could significantly reduce the deepening economic ties between China and Taiwan, a stated goal of the Tsai administration as part of her ‘New Southbound policy’.

Both countries face a security threat from China. India has a longstanding border dispute with China and recently Beijing has increased its assertive posturing in those regions. Meanwhile, Beijing has expressed its aim of annexing Taiwan — by force, if necessary. Both New Delhi and Taipei share the common interest of preventing China from making the South China Sea its exclusive zone.

With nationalist governments in power in both countries, India and Taiwan should take concrete steps to foster cooperation in security, tourism and other areas, taking their relationship to new heights.

The author is a foreign policy analyst