India Taiwan Relations: Opportunities & Challenges

Taiwan, a vibrant democracy, has not received formal diplomatic recognition from most countries (including India) primarily to avoid provoking mainland China. Presently, Taiwan has its own laws, a distinct political system, and a thriving economy known for its sizable footprint in global supply chains for medium- and high-end technological products. In 2016, the island’s politics changed significantly with the election of new president, whereby a shift away was witnessed from Taiwan’s growing economic dependence on mainland China.

• In the recent years India-Taiwan relations are strengthening and India has an interest in expanding economic and socio-cultural ties with Taiwan. However, the bilateral relationship still not explored to its full potential.

Opportunities in India-Taiwan Relations

• Taiwan is an integral part of the Asian regional supply chains. Its presence in Southeast Asian markets and economic sectors is significant. For an advanced economy like Taiwan, India is a huge market and investment opportunity. Moreover, in the midst of the United States-China trade war and strategic rivalry, and given the two countries’ respective issues with China, India and Taiwan can establish stronger trade and investment ties.
• Taiwan is looking for relocating heavy presence of Taiwanese companies in China as physical space is limited in Taiwan. India, with its 1.4 billion populations and relatively lower wages, presents a credible alternative for Taiwanese companies.
• Taiwan could be a partner in India’s “Make in India” and Atmanirbhar Bharat campaigns, which aim to attract investment from countries across the world to strengthen India’s manufacturing sector and make it self-reliant. Taiwan accounts for 60 per cent of the global market share of semiconductor chips, India can tap this opportunity.
• Taiwan is looking for more collaboration with India, especially in intellectual property, the service sectors, and science and technology.
• India diaspora can become a bridge between India and Taiwan and help to improve cultural and people-to people connections between the two countries.Parliamentarians can also act as intermediaries as Parliamentary exchanges over the years have helped in evaluating each other’s expectations and policies.
• Taiwan presents to the world an alternative model to the Chinese authoritarian model by showcasing information-sharing, honesty, transparency, and ethical behavior. It donated millions of face masks, PPE kits, oxygen concentrators and cylinders to India. Thus, India and Taiwan can collaborate in the health sector, including the traditional medicine.
• Taiwan can be embraced as a silent partner by India in Indo-Pacific region where India, along with countries such as the United States and Japan, has advocated for a free, open, and inclusive rules-based order.

Challenges

While India-Taiwan relations are registering growth and development, there are still some major challenges stunting its optimal growth, which are as follows:

• Despite showing a warm response to the idea of engaging with Taiwan, India has remained cautious as Taiwan was not responsive enough to India’s outreach attempts in the past.
• Government-to-government interactions remain limited, posing a challenge to the long-term efficacy of the relations.
• The ‘One-China’ policy has been a hindrance for India to optimally utilize the potential in the relations.
• India has not officially included Taiwan in its Act East Policy.
• Despite Taiwan’s readiness to help, India is hesitant to accept help from Taiwan directly. For instance, the aid sent by Taiwan was handled by India’s Red Cross Society rather than the government itself.
• Managing tensions with China affected the momentum in relations with Taiwan and resulted in slowdown in India-Taiwan relations. These include complicated tax regulations; corruption; insufficient understanding of each other’s investment environments and markets, cost-inflated high-skill services like business consulting, and linguistic and cultural differences are other challenges hampering strong ties between India and Taiwan.

Possibilities and Prospects

• India should make efforts towards streamlining the process of continuous engagement on critical areas such as science and technology, education, foreign direct investment and bilateral trade.
• India should engage Taiwan through available informal and formal regional platforms.
• Taiwan should be accepted as a part of the wider Indo-Pacific region, and India should contribute toward this.
• Adopt an approach that blends a people-centric process with a non-traditional security-centric policy.
• The Indian government’s ‘Act East’ policy already provides a framework for greater engagement between the states of northeastern India and Southeast Asia; this same framework also offers a concrete platform for Taiwan to make itself crucial to India’s future economic growth.
• India should designate Taiwan a consultative partner in strategies such as Make In India, Skill India, and Digital India.

Given the instability in India’s relationship with mainland China due to border disputes and other geopolitical issues, it would be prudent for India to cultivate a more normal, pragmatic relationship with Taiwan.