India-Taiwan: Connecting With the Island Nation for Multiple Takeaways

Purport of the work

Taiwan - smaller than the State of Kerala (Taiwan - 36,197 km2, Kerala – 38863 Km2)^[1][2] with a population less than Haryana (Taiwan – 2.3Cr, Haryana – 2.5 Cr)^[3][4] has strategic signatures far disproportionate to its size or population.

This work highlights how connecting with Taiwan has multiple takeaways for India and how it is faring in this field?

The Chip Connect

One activity that has actually meant a ‘name to fame’ for Taiwan is its prowess in semiconductor manufacturing. Taiwan produces more than 60% of the all the semiconductors in the world and over 90% of the most advanced ones (5-7 nanometer size range).^[5] It is for this precise reason that the world is worried for if Taiwan becomes the next flashpoint of superpower rivalry for any reason whatsoever (details not covered), the world will suffer due to its overdependence of semiconductors on a single source.

Countries round the world are thus searching for alternatives/diversifying their supply base/ building indigenous muscle in chip manufacturing etc.^[6]

On the Indian side, the semiconductor demand is being fuelled by the increasing demand for the chips for is burgeoning consumer electronics, automobiles, smartphones and the Internet of Things (IoT) market. It is expected that the Indian semiconductor market which was some 27 Bn USD in 2022 is likely to shoot up to 55 Bn by the year 2026.^[7]

How much of these we produce indigenously? According to an open source report, as of 2022, India imported a whopping 90% of its entire semiconductor requirement. In 2026 when our demand more than doubles, will we be in the same state of import dependence? The expectation is that we are likely tobe in a better state. The reason for this positive outlook is driven by the fact that the Govt. is addressing the semiconductor sector in a very aggressive manner. Some salient points in this context are presented at a glance:-

• In Dec 2021, The Govt. had approved a USD 10 bn incentive to develop semiconductor manufacturing and display devices ecosystem in India
• In Sep 2022, India announced a Design linked Initiative (DLI) to drive global and domestic investment in Chip design.^[8]
• In Feb 2023, the Govt. announced a $1.2 Bn package for doing R&D and creating prototypes of high order chips at its Semiconductor Laboratory in Mohali.^[9]
• Project ‘Semicon India’ recently conducted its 2nd edition of the Annual Global Summit (Jul 2023). This Project founded in Dec 2021 at an outlay of 76000 Crs is a major Govt. initiative for scaling up the development and production of semiconductors and display devices in India.

Besides all the indigenous efforts the Govt. is also reaching out to international big players to set up shop in India under its flagship Make in India and the Atmanirbhar Bharat Schemes. It is here Taiwan fits in. We have reached out to Taiwan in more ways than one. Here is a brief sample of that effort:-

• In was in Sep 2022 when the Indian multinational Vedanta entered into a $19.5 Bn joint venture (JV) with Foxconn, the Taiwan based world’s largest electronics manufacturing Company for manufacture of semiconductors in India. This JV fell through in July 2023 as Foxconn withdrew from it without elaborating on the reasons (one reason doing the rounds was – both JV players could not settle for a technology partner).^[10]
• On 03 July 2023, The Hindu quoting Taiwan’s Dy Minister for National defence informed that leading Taiwanese Technology firms are thinking on the option of relocating their manufacturing bases to India, as their home country hots up on the cross-wires of super power rivalry.^[11]
• As recent as Aug 2023, Foxconn, correcting its temporary setback, has announced its plans of tying up with Taiwan Semiconductor Manufacturing Company (TSMC) – the biggest chip manufacturer in Taiwan by quality and quantum, and Japan’s TMH group to establish four to five semiconductor fabrication lines in India.^[12]
• In June 2023, Taiwanese Govt. announced its desire to sign a Free Trade Agreement with India ( covered later).

All these are great developments that will end up in strengthening our indigenous semiconductor and display manufacturing muscle in India.

That said it is the sense of the author that semiconductor co-operation with Taiwan is on track. In fact, it is as a subset of the overall trade and commercial ties with Taipei. The same is well poised for a steady growth.

The Military Connect

Post Galwan in June 2020 and post 11 rounds of fruitless talks till then (total 18 as on May 2023), it was in Oct 2022, when Taipei’s Representative Baushuan Ger stated, (quote) ‘India and Taiwan are threatened by authoritarianism, they need to join hands to fend off the ‘expansion of autocracy’. It is high time for both sides to engage in strategic collaboration (unquote).^[13]

Earlier in 2018, the Parliamentary Standing Committee on External Affairs flagged the need to revisit the India’s deferential foreign policy towards China and the requirement (and appropriateness) of using all options including its relations with Taiwan.^[14]

While not taking comfort in the simplistic ‘enemy-of-enemy’ approach, the current arrangement of keeping the ‘One China Policy’ intact at one end and opening up on multiple fronts with Taiwan on the other actually fits well. It can be likened to ‘keeping the thorn in place’. How does this relate to the military domain at this point in time? Here is a brief take by the author:-

• Not very much in quantum terms at present, but gaining great importance as time flows is what kind of describes the military connect between India and Taiwan as of now.
• That said, the visit by the three former Service Chiefs (Gen Narawane, Admiral Karambir and Air Chief Marshal Bhaduria) to Taiwan in Aug 2023 to take part in the Ketagalan Forum 2023 Indo Pacific Security Dialogue upon the invitation of Taiwan’s Ministry of Foreign Affairs holds significance.
• This Forum provided a platform for a collective voice of Indo-Pacific countries against the authoritarian regimes increasingly becoming more and more aggressive and belligerent (no points for guessing the reference to).
• India needs to be on this platform for more reasons than one; in implementation of its Act East Policy, for the security of its sea lines of communication in particular the Taiwan Strait and for showing reciprocity in proxy for unilateral actions of our northern neighbour elsewhere on the border.
• Who understands the PLA better? A first hand dialogue on multiple security challenges vis-à-vis a ‘common threat’ is indeed a great opportunity. Also a chance to get valuable inputs on how to deal with a sudden crises developing in Taiwan.^[15]
• According to one unconfirmed open source report the visiting delegation, that also included some serving officers, had a session with the Taiwanese think tank Institute of National Defence and Security Research and discussed the Taiwan contingency in case of a full scale attack by China.^[16]
• The former Naval Chief is on record to have stated at the above forum that China will only act against Taiwan when it believes that the balance of power is in its own favour. (Therefore) it is important that we work to ensure that this balance of power does not shift.^[17]
• Rather delayed but on expected lines, China on 01 Sep reacted by stating, (quote) “China firmly opposes all forms of official interactions between Taiwan authorities and countries having diplomatic relations with China. We hope that the country concerned will abide by the One China Principle, prudently and properly handle Taiwan related issues and refrain from having any military or security cooperation with Taiwan” ( unquote). ^[18]
• Counter question- Does China respects ‘One India’ policy. This poser need not be answered as actions speak louder than words – CPEC in PoK, Galwan clash; stapled visas for Arunachal nationals, repeatedly renaming cities and peaks of Arunachal Pradesh with Chinese names … the list is endless. The latest being the China’s Standard Map 2023 that shows Aksai Chin and Arunachal Pradesh as their own territories. Not only India, the said map has angered four more countries whose sovereign territories have been maliciously claimed. These include Indonesia, Malaysia, Philippines and Vietnam. So much for reciprocity on One China policy.
• In sharp contrast to these crass actions that attract world criticism, our equation is more matured with Taiwan.
• As war clouds intensify over Taiwan, as Chinese military drills practicing a quarantine type of a stranglehold of Taiwan increase in frequency, and as there is a surge of air drills by hordes of strike aircrafts over Taiwan or the firing of missiles that actually land in Japan’s EEZ increases, what can India do in pure ‘military’ terms?
• It is the sense of the author that while militarily it will be unlikely and practically infeasible for India to get directly involved in a Taiwan war with China, what may be a sure possibility is to effectively keep tied a Chinese theatre sized force across its 3500 km long LAC by undertaking many an actions short of war.
• To that extent the Indo-US joint exercise Yudh Abhyas conducted in Nov 2022 in the High altitude area barely 100 km of the LAC has significance.^[19][20] That the 2023 edition of Yudh Abhyas should be unfolding in two months time, is a near certainty.
• In May 2023, Taiwan conducted Han Kuan - a five day exercise stimulating the response of its armed forces in the contingency of a Chinese invasion of the island Nation.^[21] Will the takeaways from such exercises be of interest to the Indian Navy? Going by what the former CNS stated at Ketagalang – Yes.
• Joint naval exercises in the future? Appears a bit far-fetched and uncertain at the moment, besides being pregnant with disproportionate collaterals. However, it is relevant to keep it on ‘to do’ list for now. Who knows how the geopolitics in this area shapes up in times to come?
• Is keeping a force tied down is all that is possible? Far from it. Freedom of navigation through the international waters of the South China Sea (SCS) is important for us, safe and continued freedom of navigation and trade flow through the Taiwan Strait is important to us. Should the push come to a shove, we should do all to protect our national interests. Taking like-minded countries along, voicing our concerns in the international fora, weighing in (without picking sides) on the forces standing up for the UNCLOS and freedom of navigation in SCS and more.
• The world just witnessed India’s act of voicing our concerns nice and proper when our PM making dash to attend the East Asia summit just prior to G 20 Summit said “India believes in the necessity for the Code of Conduct in the South China Sea to be both effective and in accordance with the United Nations Convention on the Law of the Sea (UNCLOS)”.^[22]
• During the Combined Commander’s Conference in Lucknow in Aug 2023, the Chief of the Defence Staff Gen Anil Chauhan has reportedly ordered a Study to assess India’s possible options in response to a potential invasion of Taiwan by China.^[23]
• As G20 Summit has reached its conclusion there is a buzz in the open source about India considering its options for a possible response to a potential Chinese invasion of Taiwan. Some discrete inquiries seem to have been made on what India can do in case Taiwan war blows out. Several options are doing the round as well – logistic hub for allied forces (berthing, fuel, repair, replenishment, and maintenance support), heating up the Northern border.^[24] What about weighing in on the Malacca Strait from the Military bases in the Andamans? Striking where it hurts most.^[25]
• An invasion of Taiwan by the PRC making the third crises in the Taiwan Strait (earlier in 1954-55 and 1958) will surely have a debilitating impact on our economic and national security interests in the Indo Pacific. Weighing in our risks and taking actions to mitigate the same should be our priority.^[26]
• In a comprehensive report by Carnegie India Organization titled – ‘What should India do before the next Taiwan crises’, the author Mr. Vijay Gokhale, the ex Foreign Secretary, opines that there is a requirement of the whole-of-the-government assessment on mitigating the direct and indirect impact of Taiwan crises on the Indian economy. The entire dynamics of the area must be under its close focus. India needs to assess what pressures will bear upon it both from the US and China in the event of Taiwan clash and prepare a response to it based upon its national interest. ^[27]
• On the flip side, in case of Taiwan contingency, China itself will put pressure on the LAC in all probability posing a collusive threat with Pakistan. We need to be prepared for such an eventuality.

The Commercial Connect

The commercial connect with Taiwan is already on an upsurge and needs to remain on this exponential trajectory. In this context only some highlights are briefly captured:-^[28]

• While in the period between 2015-2021/23 the two-way trade between India and Taiwan jumped some 60 % to cross the $ 10 Bn mark ( 4.7Bn in 2015) the balance of trade is highly skewed and is in Taiwan’s favour (2.6 vs 8.3 Bn).
• This skewed balance needs to be corrected. We need to diversify our current export basket of mineral fuels, iron, steel, organic chemicals and plastics. That should be a work at hand between India Taipei Association (ITA) and Taipei Economic and Cultural Centre (TECC) both respectively responsible to promote economic ties between the two countries or the multiple other institutional mechanisms already in existence (Taiwan External Trade Development Council – TAITRA or the Taiwan India Business Association-TIBA).
• Now that a Free Trade Agreement (FTA) appears a clear possibility , especially after the Taiwanese Foreign Minister’s statement about (Taiwan’s) ‘enormous appetite’ to expand ties with India, fears are that it may further skew the trade balance more in favour of Taiwan as its goods will find a greater access to Indian markets. This needs to be guarded by crafting mutually beneficial terms in the FTA.^[29]
• Tourism and education have been identified as two major areas where India can score. Taiwanese tourists to India are a miniscule (just 48000 out of 17 million - a 2019 report) . This must be up-scaled hugely.
• In education, the Indian STEM (Science Technology, Engineering and Maths) muscle should be able to address the current talent crunch in Taiwan.’ In this, Invest India- the national investment promotion and facilitation agency and Taiwan’s Industrial Technology Research Institute (ITRI) are working to build linkages to address this deficit.
• Some other areas of trade and cooperation as identified in a compressive report by Ms. Sana Hashmi, a Fellow at Taiwan Asia Exchange Foundation are- Electric Vehicles (EVs), Health and medical diagnostics and technical cooperation in the Bamboo industry where India is the second largest producer.^[30] ( not detailed further)

Those in the current arrangement of unofficial relations, commercial ties can grow unhindered augurs well for both the countries. In this context the invitation to the Indian industry by Director Taipei Trade Mission at World Trade Centre Mumbai to participate in the Taiwan Expo being held in Mumbai from 05-07 Oct 2023 fits well. In this event some 50 Taiwanese firms will be exploring new supply chain partners from India. ^[31]

Will India be found wanting? Not at all.

That briefly sums up the win-win between Taiwan and India as of date.

Endnotes

^[1] “Taiwan.” at www.en.m.wikipedia.org.Accessed [3] on 21 Aug 2023.
^[2] “List of States and Union Territories by area,” at www.en.m.wikipedia.org.Accessed [3] on 21 Aug 2023.
^[3]ibid
^[4] “Haryana” at www.haryana.gov.in.Accessed [4] on 21 Aug 2023.
^[5] “Taiwan’s dominance of the chip industry makes it more important,” at www.economist.com [5]. Accessed on 01 Sep 2023
^[6] “India and the semiconductor scenario,” at www.vifindia.org.Accessed [6] on 04 Sep 2023.
^[7] “India emerging as a major player in the semiconductor manufacturing industry,” at www.economictimes.indiatimes.com.Accessed [7] on 05 Sep 2023.
^[8] “Design linked incentive,” at www.chips.dli.gov.in.Accessed [8] on 05 Sep 2023.
^[9]Semiconductor laboratory Mohali,India,” at www.en.m.wikipedia.org [9]. .Accessed on 05 Sep 2023.
^[10] “What happened to the US $19.5 Bn Vedanta foxconn deal,” atwww.techwireasia,com. .Accessed on 05 Sep 2023.
^[11] ‘India a key destination to strengthen global supply chains..” at www.ctimes-com.cdn,ampproject.org [10]. .Accessed on 05 Sep 2023.
^[12]India’s semiconductor sector: tracking Government support..” at www.india-briefing.com [11]. Accessed on 05 Sep 2023.
^[13] “India Taiwan need to join handsto fend off..” at www.economictimes.indiatimes.com [12]. Accessed on 06 Sep 2023.
^[14]Taiwan: An Indian View,” at www.brookings.edu.Accessed [13] on 06 Sep 2023.
^[15] “Why are three former Chiefs..” at www.indiatoday-in.cdn.ampproject.org [14]. Accessed on 06 Sep 2023.
^[16] “India’s three former Service Chiefs held a closed door meet in Taiwan,” at www.theprint.in.Accessed [15] on 06 Sep 2023.
^[17] “China will act against Taiwan..” at www.swarajyamag.com [16]. Accessed on 06 Sep 2023.
^[18] “China warns India..” at www.hindustantimes.com [17]. Accessed on 06 Sep 2023.
^[19] “India has a stake in Taiwan’s Defence,” at www.asia.nikkei.com.Accessed [18] on 07 Sep 2023.
^[20] “India, US Armies hold exercises close to disputed Chinese Border,” at www.thediplomat.com.Accessed [19] on 07 Sep 2023.
^[21] “Amid China threat, Taiwan starts 5 day military exercise,” at www.tribuneindia.com [20]. Accessed on 08 Sep 2023.
^[22]PM Modi at East Asia Summit urges collective action for sovereignty amid South China Sea tensions,” at www.bctv18-com.cdn.ampproject.prg.Accessed [21] on 09 Sep 2023.
^[23] “Indian Military weighs optionsin case China attacks Taiwan,” www.stratnewsglobal.com [22]. Accessed on 09 Sep 2023.
^[24] “India Military studying options for any China War on Taiwan,”atwww.m.ecomomics.com.Accessed on 09 Sep 2023.
^[25]ibid
^[26]India’s military studying options for any Chian war on Taiwan,” at www.bloomberg.com.Accessed [23] on 09 Sep 2023.
^[27] “What should India do before the next Taiwan Strait crises,” at www.carnegieindia.org [24]. Accessed on 09 Sep 2023.
^[28] “Role of commercial ties in advancing India Taiwan relations.”At www.orfonline.org.Accessed [25] on 08 Sep 2023.
^[29] “Taiwan has ‘enormous appetite to expand ties..” at www.timesofindia.com [26]. Accessed on 08 Sep 2023.
^[30]24 ibid
^[31] “India and Taiwan to boost supply chain partnerships.” At www.economictimes.indiatimes.com.Accessed [7] on 08 Sep 2023.

(The paper is the author’s individual scholastic articulation. The author certifies that the article/paper is original in content, unpublished and it has not been submitted for publication/web upload elsewhere, and that the facts and figures quoted are duly referenced, as needed, and are believed to be correct). (The paper does not necessarily represent the organisational stance... More >>