Taiwan can play a crucial role in helping India cut down its dependence on China for electronic components, Taiwanese Deputy National Security Advisor Hsu Szu-Chien said on Thursday. He emphasised that the best way to strengthen bilateral economic ties would be through a free trade agreement (FTA) between India and Taiwan.

In an exclusive interview with PTI, Hsu stated that such a trade deal would encourage greater investments from Taiwanese companies in India's semiconductor and high-tech sectors. The agreement would also help address India’s “high tariff” regime, making it easier for Taiwanese businesses to expand operations in the country.

Hsu, who was in New Delhi for the Raisina Dialogue, India's premier geopolitics conference, held closed-door discussions with Indian officials to explore ways to enhance India-Taiwan relations. He highlighted the potential for collaboration, noting that India's large workforce and Taiwan’s technological expertise could complement each other in producing high-end electronic components domestically, thereby reducing imports from China.

India’s Growing Trade Deficit with China

India's trade imbalance with China has been a growing concern, with imports from China reaching $101.75 billion in 2023-24, while exports stood at just $16.65 billion. A significant portion of these imports includes electronic components, telecom equipment, computer hardware, chemicals, and raw materials for pharmaceuticals. Hsu pointed out that joint production of electronic goods with Taiwan could help India lower this deficit.

"Most of these are ICT (Information and Communication Technology) products, which India has the potential to manufacture domestically. Taiwan can assist not just in semiconductor production but across the ICT sector," he said.

Taiwan’s Interest in a Trade Agreement

Taiwan has been actively seeking a trade agreement with India, seeing it as mutually beneficial. Hsu expressed concern that India's high tariffs deter medium and small-sized Taiwanese firms from investing. “It has to do with the fact that the tariff is really high. It's really not very good, especially for medium and small-sized Taiwanese high-tech companies to come over to invest,” he noted. “A trade deal will be beneficial for both sides.”

Both countries have conducted feasibility studies on the proposed FTA and held preliminary discussions. Taiwanese businesses are increasingly looking to shift their production bases away from China to destinations such as Europe, North America, the U.S., and India, primarily due to escalating trade tensions between Washington and Beijing and China's growing military assertiveness near Taiwan.

India-Taiwan Economic Relations

Currently, India ranks as Taiwan’s 17th largest trading partner. Under India's "Make in India" initiative, Taiwanese investments in the country have surpassed $4 billion, spanning industries such as footwear, machinery, automobile components, petrochemicals, and ICT products. Given Taiwan’s dominance in the semiconductor industry—producing nearly 70% of the world’s semiconductors and over 90% of the most advanced chips—closer economic ties could prove advantageous for both nations.

Geopolitical Factors at Play

Taiwan, home to over 23 million people, views itself as a sovereign nation, while China considers it a breakaway province that must eventually be unified with the mainland, by force if necessary. Despite not having formal diplomatic ties, India and Taiwan have seen a steady rise in trade and investment collaborations. In 1995, India established the India-Taipei Association (ITA) in Taipei to facilitate business, cultural exchanges, and tourism. Taiwan reciprocated by opening the Taipei Economic and Cultural Centre in New Delhi.

As India looks to diversify its supply chains and reduce reliance on China, stronger economic cooperation with Taiwan could open new avenues for technological and industrial growth. Hsu remains optimistic about the future, stating, "I hope there will be renewed momentum from both sides to go ahead."