Tech and prosperity pillars in the Indo-Pacific.
As we approach the 30th anniversary of India-Taiwan relations, it is evident that both countries are standing at a critical juncture. The evolving geopolitical landscape, especially in the Indo-Pacific region, has brought about significant shifts in their bilateral ties, positioning them as crucial players in ensuring regional stability and prosperity. Taiwan’s New Southbound Policy, initiated in 2016, has led to a substantial expansion of cooperation with India, with a growing emphasis on the Indo-Pacific strategy. While India has articulated a clear vision for the Indo-Pacific region, Taiwan lacks an official strategy.
However, both nations share a common ground in prioritizing regional stability and security, making their partnership increasingly pivotal in the broader geopolitical context.
The decision by both India and Taiwan to steer clear of China’s ambitious Belt and Road Initiative (BRI), Regional Comprehensive Economic Partnership (RCEP), and the South China Sea Code of Conduct (CoC) has emphasized their shared values and interests. The geographical significance of both Taiwan and India further underscores their strategic importance in the Indo-Pacific. Taiwan’s leadership in technology and India’s emergence as a manufacturing hub create a symbiotic relationship, offering each other essential resources for economic and technological growth. This collaboration not only contributes to their individual development but also fosters stability and progress within the region.
Taiwan’s value is often defined and misperceived solely in the semiconductor industry. In reality, Taiwan’s expertise lies in industrial upgrading. Taiwan’s leading position in semiconductors became prominent only during the US’s chip sanctions against China. Taiwan’s value lies in its perpetual technological leadership, and these sanctions have highlighted this leading characteristic.
The perception in India is that Taiwan is only a semiconductor expert. After President Lai Ching-te took office, there has been a focus on positioning Taiwan as an “Artificial Intelligence (AI) Island” by establishing an AI Cabinet. Following his inauguration, he invited seven prominent AI companies to Taiwan and announced the start of a new phase of technological advancement from this “AI Island.” This indicates a resurgence in technological cooperation between the United States and Taiwan to position Taiwan as a leading AI-focused hub.
In India’s pursuit of high-tech and economic development in the five-year plan, collaboration with Taiwan is considered important. However, Taiwanese businesses are hesitant to engage due to uncertainties around the trustworthiness of India’s upstream and downstream enterprises, as well as potential challenges related to taxation, management, and infrastructure. Addressing these concerns is crucial for optimizing supply chain collaboration between Taiwan and India.
The Taiwan Strait is important in the Indo-Pacific supply chain, and its stability directly impacts regional security. Taiwan, with its leading position in high-tech manufacturing, is an attractive partner for India as it aims to upgrade its industrial capabilities and emerge as a hub in the Indo-Pacific region. India’s large domestic market and strategic location also make it an appealing destination for Taiwanese technology firms seeking to diversify their supply chains away from China. Through collaboration on technology transfer and investment, the two countries can capitalize on their complementary strengths to drive economic growth and enhance their positions in global supply chains. This strategic partnership offers mutual benefits, allowing India to pursue self-reliance and Taiwan to expand its international footprint beyond its tense relations with China.
The conflict in the Taiwan Strait has long been a cause for concern, particularly for India, given its strategic interests in the Indian Ocean and beyond. Economist Raghuram Rajan’s warnings about the global repercussions of a potential Chinese incursion into Taiwan reinforce the critical role of Taiwan Strait stability in safeguarding India’s security interests.
Security of the strait is essential for maintaining uninterrupted trade and economic activities. It is estimated that nearly 50% of global container shipping passes through the Taiwan Strait and over 55% of India’s trade by volume passes through the South China Sea and Malacca Straits. Therefore, any blockade of the choke points (Malacca and Taiwan Straits) to the north (Taiwan Strait) due to a conflict would severely affect India’s trade flow and have several economic implications for India, given its dependence on global trade and economic stability. It would affect economic activities between India and Northeast Asia (Japan and South Korea) as the Taiwan Strait will become inaccessible to commercial shipping.
As we look to the future, Taiwan and India must recognize the significance of their partnership in shaping the Indo-Pacific. Taiwan’s technological prowess complements India’s economic aspirations, bolstering the region’s prospects for stability and progress. Furthermore, aligning their efforts to counter China’s aggressive expansionist policies will be instrumental in ensuring a secure and prosperous Indo-Pacific. In essence, the evolving dynamics of India-Taiwan relations present an opportunity for both nations to foster a deeper and more strategic partnership. By leveraging each other’s strengths and addressing mutual concerns, Taiwan and India can effectively contribute to shaping an inclusive, open, and prosperous Indo-Pacific. As the 30th anniversary approaches, both nations must heed the call to nurture their crucial roles in the region’s future.
Prof. Lin, Hsiao-Chen is Assistant Professor, Graduate Institute of International Affairs and Strategic Studies (GIIASS) at Tamkang University & Member of Taiwan’s 2024 Ministry of National Defense QDR Advisory Committee. Namrata Hasija is Research Fellow, Centre for China Analysis and Strategy.