The Asia-based Hinrich Foundation said ‘India finds itself well-positioned to absorb these supply chains’.
If India is going to do it, they got to do it now.
-Bloomberg
The ongoing technology Cold War between the United States and China has opened a window of opportunity for India in many ways. The Asia-based Hinrich Foundation, which has been set up by US entrepreneur Merle Hinrich, quoting a research paper said “India finds itself well-positioned to absorb these supply chains”.
This is the moment India has been forecasting for itself. Though it was becoming amply clear during President Donald Trump’s Administration itself that the trade war between the US and China would continue even if on a lower scale. Then Covid-19 exposed the weak link in supply chain manufacturing concentrated in China, which was worst hit by the pandemic, and nearly collapsed the world economy. The chorus of diversifying supply chain manufacturing out of China has only grown louder since. It has also been hastened by China’s assertive behaviour in the South China Sea and its rejection of the established world order by way of declining to abide by the judgement of PCA on the Scarborough shoals. Rejecting to abide by the UNCLOS to which China herself is a signatory has served as a warning to the G20 and the rest of the world of the future which could unfold. China’s claim of the 9-dash line in the South China Sea gives it a claim of over 80% of the sea-room. China expects vessels to obtain prior clearance for transiting through SCS. Trillions worth trade of global commons traverse the SCS; so any restrictive transit regulation (that too unlawful) could have an adverse impact on the quantum of trade.
During the pandemic, China indulged in aggressive behaviour on the Line of Actual Control between Tibet and Ladakh, in Hong Kong and SCS islands, which expedited the coming together of the democracies in the Indo-Pacific. The frequently voiced Quadrilateral Security Dialogue was institutionalised by the coming together of the US, India, Japan and Australia. Four executive heads of state met virtually and agreed to work towards a free and open sea, and inclusive and non coercive trade deals. They also called for working together to combat Covid for the benefit of all in the Indo Pacific. They also pledged to prioritise supply chain manufacturing amongst the Quad countries.
China had begun taking advantage of the situation with its assertiveness, having controlled the pandemic earlier than rest of the world. It wasn’t parting with vaccines to the needy and the economically weak nations. India, on the other hand, began rolling out the vaccine and distributed it to over 60 countries. This elevated India’s stature as the pharmacy of the world, the products of which it was sharing with the world.
The time is ripe for India to realise its place in the comity of nations. The march has commenced for “Aatmanirbhar Bharat”. It needs the entire country’s collective effort and has the potential of providing jobs and lifting large numbers of countrymen out of poverty. India must achieve its goal of becoming a $5 trillion economy if it has to meet those goals of prosperity. The federal states of India must amend their rules in line with the Central government’s policies to facilitate foreign direct investment. The opportunity to provide ideal conditions for manufacturers to move production lines to India is the need of the hour. Government on its part should operationalise the Quad agreements and assure the three partner governments that their manufacturers could shift their units to India.
It is in this context that India-Taiwan relations need intensification. The present bilateral trade volume of $7 billion between the two trading partners is aimed to reach to $20 billion in the next five years. India has a vast pool of skilled manpower and space to accommodate new technologically driven industries. By the sale volume, the TSMC of Taiwan is the third largest entity in the world manufacturing semi conductors with a figure of $45.42 bn, behind Intel (US) and Samsung of South Korea. Two bold decisions by India are essential at this stage, one to finalise a trade pact with Taiwan with the provisions which facilitate manufacturing (providing land, power, water, space for accommodation and tax holidays); second is to put in place modalities of safety of ships and crew in transit till delivery. IMO has provisions for two trading partners to agree to a security framework which ensures search and rescue from ships flying their flags or destined for each other’s ports and also during transit of ships carrying public goods.
Even under the one-China policy, trade with Taiwan is permitted; it needs provision for longer duration cooperation and security of trade in transit and in harbour. This calls for a trade pact. India should weigh its national interests versus PRC’s reaction to a trade pact with Taiwan. On the part of PRC, it has banned the entry of citizens of 20 countries (including India) if they haven’t been injected with the Chinese vaccine, whereas India hasn’t taken any reciprocal action. As far as the Ladakh-Tibet border clash is concerned, agreements reached so far must be traded with caution, as the worse could yet be coming. This period of relative calm could be utilised to alter the status quo on Taiwan. India’s Taiwan moment is now and here.
Vice Admiral Shekhar Sinha is former Commander in Chief Western Naval Command & Chief of Integrated Defence Staff; and Trustee, India Foundation.