After his reelection, India’s Prime Minister Narendra Modi made a significant move by publicly thanking Taiwan’s leader, President Lai Ching-te. This action is noteworthy because many countries avoid publicly engaging with Taiwan to avoid angering China. Tensions between India and China, both major powers in Asia, have been increasing. Modi expressed interest in closer ties with Taiwan, emphasizing mutually beneficial economic and technological partnerships. While India and Taiwan do not have formal diplomatic relations, Modi has sought to strengthen economic ties during his tenure. An employment pact between the two countries could allow Indians to work in Taiwan, and Taiwan aims to increase its investment in India. This development reflects the evolving dynamics in the region and India’s strategic approach to counter Chinese aggression.
The current state of India-China relations
The relationship between India and China has been complex and marked by both cooperation and tension. Here’s a summary of recent developments:
- Stabilization in 2023: While the long-expected thaw did not fully materialize, there was some stabilization in relations. The heavily militarized border remained mostly quiet, and the two sides discussed resolving the border standoff. However, negotiations did not yield complete disengagement between their armies¹.
- Fundamental Issues: The unsuccessful thaw highlights deeper issues, including the India-U.S. partnership to counter Beijing, the military race, and growing competition in South Asia. Despite efforts, a breakthrough has not yet been achieved¹.
- Current Outlook: As of now, tensions persist, and there are few signs of significant progress. The border dispute remains unresolved, and both countries continue to assert their positions³⁴.
The potential economic benefits for both India and Taiwan
The India-Taiwan economic corridor holds significant promise for both countries, fostering mutually beneficial outcomes. Let’s delve into the specifics:
- Trade Relations:
- India’s “Look East” policy, established in 1991, revitalized ties with Taiwan. Since then, total foreign trade has grown by an average of 10% annually, reaching $US8.5 billion in 2023.
- India now ranks as Taiwan’s 16th largest trading partner.
- Taiwan’s diverse economy produces sought-after goods, from shoes to semiconductors.
- Taiwan’s Expertise and India’s Ambitions:
- As India aims to become the world’s third-largest economy by 2030, it needs investment in machinery and technology.
- Taiwan, with its cutting-edge expertise, can bridge technical gaps in India’s economic story.
- India’s inexpensive labor costs, technology advancements, policy-linked production incentives, and improving business conditions make it an attractive destination for Taiwanese manufacturers.
- Strategic Partnership:
- Taiwan’s advanced economy can support India’s journey to becoming a global economic powerhouse.
- Sectors like chipmaking and electronics offer opportunities for deeper collaboration.
- In 2023, the Taiwanese government established the Taipei Economic and Cultural Center (TECC) in Mumbai to promote bilateral relations.
- Taiwanese companies have already invested around $US4.5 billion in India, creating 170,000 jobs. However, there’s room for growth, as foreign direct investment (FDI) from Taiwan remains less than 1% of its total FDI stock¹.
The history of India-Taiwan relations
Let’s delve into the historical context of India-Taiwan relations:
- Cold War Era:
- India was one of the first non-communist states to recognize the People’s Republic of China (PRC) under the Communist Party.
- Despite this, unofficial ties with Taiwan continued through the 1950s and 1960s.
- India’s “Look East” policy from 1992 increased Taiwan’s salience in Indian policy, leading to substantive economic and other content in their relationship².
- Post-Cold War Shift:
- After the collapse of the Soviet Union in 1991, India’s approach evolved.
- The launch of India’s “Look East” Policy played a pivotal role in reshaping India-Taiwan relations.
- Economic and political interests now align in preserving peace and stability in the Taiwan Strait and the broader Indo-Pacific region³.
Here’s a concise summary of India-Taiwan relations, including historical context and recent developments:
- Historical Context:
- During the Cold War, India recognized the People’s Republic of China (PRC) but maintained unofficial ties with Taiwan.
- India’s “Look East” policy from 1992 strengthened economic and other aspects of India-Taiwan relations.
- Post-Cold War, both countries emphasized economic cooperation and regional stability.
- Recent Developments:
- In 2023, India’s Prime Minister Narendra Modi publicly thanked Taiwan’s leader, President Lai Ching-te, signaling closer ties.
- Taiwan’s advanced economy can support India’s economic ambitions, while India offers an attractive market for Taiwanese investment.
- Sectors like chipmaking and electronics hold promise for deeper collaboration.
In summary, India and Taiwan share a long history of relations, emphasizing economic cooperation and regional stability. This partnership aligns with India’s economic ambitions and allows Taiwan to expand its offshore presence. Together, they can drive innovation, trade, and prosperity. The evolving partnership reflects their shared interests in trade, technology, and regional stability. While the situation remains complex, diplomatic efforts continue, and future developments remain uncertain. 🌏🤝
Source: Conversation with Copilot, 6/6/2024
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