The Stars Are Aligned: The Future of India-Taiwan Relations

The Stars Are Aligned: The Future of India-Taiwan Relations
Photo Credit: EPA/達志影像
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With a DPP government in Taiwan and a BJP-led government in India, there is a growing desire among diplomats, strategists, journalists and others for the two countries to consolidate, if not expand, their bilateral ties.

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After a gap of eight years, the Democratic Progressive Party (DPP) has come back to power in Taiwan, with Tsai Ing-wen (蔡英文) taking the oath of office on May 20. While the peaceful transition of power has further deepened democratic processes in Taiwan, internationally the DPP’s victory is a welcoming development, coming at a time when China is militarizing the South China Sea and threatening other countries in the region and outside not to pursue their interests in the area. Thus, the coming of the DPP to power is viewed as a strategic asset to deal with China’s hegemonic ambition in the region and beyond.

The DPP has always advocated deepening ties with countries like the U.S., Australia, Japan and others to maintain peace and security in this part of the world. It also has a special bond with India.

Bilateral ties between India and Taiwan witnessed significant developments under former President Chen Shui-bian’s (陳水扁) “Go South” policy. On Oct. 17, 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 2004, Taiwan began offering the Taiwan Scholarship and Mandarin Scholarship (National Huayu Enrichment Scholarship) to Indian students. Funding for the Taiwan Scholarship was provided by the Ministry of Education (MOE), the Ministry of Economic Affairs (MOEA) and the National Science Council (NSC, now the Ministry of Science and Technology, or MOST).

The Faculty of Social Science at the University of Delhi and Taiwan’s National Chengchi University (NCCU) also signed an MOU in 2007.

Airlines started direct flights between New Delhi and Taipei in 2003, establishing direct air contact between Taiwan and India. In 2006, the Taiwan-India Cooperation Council (TICC), a private organization, was established in Taipei, with then-DPP chairman Yu Shyi-kun (游錫堃) serving as its first chairman. The Council aims to act as a bridge to promote economic exchanges and broader cooperation on bilateral interests between Taiwan and India.

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. Under the MOU, the DST and the NSC (now MOST) hold annual meetings alternately in New Delhi and Taipei, which are attended by four to five representatives from each side. The main purpose of the annual meeting is to invite research proposals.

With a DPP government in Taiwan and a BJP-led government in India, and with both countries having deepened cooperation in a wide range of areas including economic, trade, commerce, science and technology and others, there is a growing desire among a number of diplomats, strategists, journalists and others for the two countries to consolidate, if not expand, their bilateral ties.

One area that requires special attention by both countries is bilateral economic and trade engagement. While trade between the two countries has increased from US$1.2 billion in 2000 to US$5.9 billion in 2014, with nearly 70 Taiwanese companies working in different sectors of the Indian economy, New Delhi and Taipei still have a long way to go before they can realize the full bilateral potential in this area.

One fundamental obstacle is the Taiwanese business community is not very much aware of India as a major investment destination. Another factor is many Taiwanese believe that India does not have good infrastructure facilities like road, electricity, proper law and order that are essential for smooth business operations. The Taiwanese business community has a strong feeling that the Indian bureaucracy is unhelpful to doing business in India.

China, which has emerged as Taiwan’s number one trading partner and investment destination, is another factor that has overshadowed Taiwan’s economic relations with other countries. Total bilateral trade was worth US$113.2 billion in 2013, accounting for 21.57% of Taiwan’s total trade. China is the biggest and closest market available to Taiwanese entrepreneurs, and is capable of satiating their appetite. At the same time, it has the advantage of nearness, a shared language, culture, customs and traditions where personal connections are easy to build.

In comparison, India is a distant country, with an unfamiliar civilization and language, and where personal connections and bonds are difficult to cultivate. Besides, Taiwanese entrepreneurs are more inclined to trade with the developed world than with developing economies. China’s export-friendly policies have been a major attraction for them. Taiwanese companies doing business in China are, in general, export-oriented; they use China to gain access to markets in the developed world. In the case of India, Taiwanese entrepreneurs are convinced that India does not provide better, or at least equal, options for export.

India’s policy to deny visa to Taiwanese people to places where Chinese people are not allowed is not seen in a good light by prospective Taiwanese investors. The Taiwanese business community has also expressed its reservations over the fact that Taiwanese companies, like Chinese companies, have to undergo a longer review process in India, and are not given a one-time banking clearance to bring in capital.

It has become more imperative for the Indian government to address the above-mentioned obstacles affecting bilateral economic ties. 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.

For instance, if India’s expertise in software and Taiwanese expertise in hardware came together, it would be beneficial to both sides. At the same time, by providing a market of its size, 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. With the use of Taiwan’s agro-technology, India could also transform its agriculture sector. While the Modi government has already taken a plethora of initiatives to promote ease of doing business, scaling up India’s rank from No.13 last year to second this year in the Global Retail Development Index (GRDI), it still needs to foster close people-to-people contacts to promote business between the two countries.

Since the Modi government has attached huge importance to soft diplomacy as a part of India’s foreign policy to achieve national interests, the ideal of promoting tourism with Taiwan can be an attractive way of cementing ties between the two countries. Among other things, Buddhism is the religion of the majority of Taiwanese people, and India is the homeland of this religion.

Strategically, 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. While Taiwan can further consolidate its identity as an independent state, India will strengthen its position in the region.

As Taiwan has a better understanding of the People’s Republic of China, developing strategic ties with it could greatly help India better understand Beijing’s strategic thinking, thereby building its own military capabilities. While the Modi government has given special attention to developing triangular and quadrilateral coalitions with the U.S., Japan and Australia as a part of its regional security strategy, the inclusion of Taiwan could prove very significant in this endeavor.

India and Taiwan have shared common interests in many areas ranging from the China factor to economic, science and technology and others. With nationalist governments in power in both countries, we can hope that New Delhi and Taipei will make calibrated efforts to transform their bilateral ties into a strategic partnership in the near future. In so doing, it would be desirable for both countries to create a joint task force to outline possible institutional linkages cementing the relationship.

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