India-Taiwan should finalise free trade agreement says envoy

New Delhi, Oct 10: India and Taiwan should finalise the proposed free trade agreement (FTA) at the earliest as it will remove all barriers to trade and investment and help create a secure and resilient supply chain, Taipei's de-facto Ambassador Baushuan Ger said.

The envoy said Taiwan is willing to share its expertise with India in critical sectors such as semiconductors, 5G, information security and artificial intelligence, and that his country can be an "excellent" partner in New Delhi's quest for becoming a hub for manufacturing of cutting-edge electronics.

"The signing of the FTA will further remove all trade and investment barriers and lead to a jump in bilateral trade and investment," he told PTI.

"In addition, it will help attract Taiwan companies to invest in India to establish production bases, sell India-made products to the world, and help India transform into a global manufacturing centre," Ger said.

His comments came amid escalating tensions in the Taiwan Strait following China's military build-up in the region in response to US House Speaker Nancy Pelosi's visit to the self-ruled island of more than 23 million people in August. China considers Taiwan as its breakaway province.

"To build on the momentum of increasing bilateral investment and trade collaboration, it is high time that Taiwan and India consider signing an FTA at the earliest possible in order to create a secure and resilient supply chain and more value-added platforms for long-term cooperation," Ger said.

The Taiwanese envoy said given the changing international political and economic dynamics, there is an opportunity for India to play a more important role in the supply chain "realignment".

Taiwan is a leading producer of semiconductors globally and at least a couple of Taiwanese companies have shown interest in India's production-linked incentives (PLIs) scheme worth Rs. 76,000 crore for the electronics sector.

India is looking at manufacturing semiconductors in the face of a global shortage in view of their increasing demands in modern electronic devices such as smartphones and cars.

India does not have formal diplomatic ties with Taiwan but both sides have trade and people-to-people relations.

Following the eastern Ladakh border row with China, some experts in India have been pushing for upgrading New Delhi's ties with Taipei, especially in the trade and investment sectors.

The de-facto ambassador said Taiwan has comprehensive supply chains and ecosystems in the manufacturing sectors, including semiconductors, and noted that a deeper trade collaboration would be beneficial to both sides.

Last year, the two sides set up four groups with a focus on setting up of a semiconductor hub, training manpower for the industry, to explore a bilateral investment pact and a free trade agreement.

"Since the US-China trade conflicts, Taiwanese companies have shown flexibility while acting in line with the government's 'New Southbound Policy'. Specifically, many have relocated their production bases back to Taiwan or to Southeast Asian countries," Ger said.

"The sectors involved include high-end servers, ICT equipment, smart transportation, panels, and automated production lines, etc," he added.

Unveiled in 2016, the New Southbound Policy is aimed at expanding political, economic, and people-to-people linkages with democratic countries, including India.

Ger said Taiwan has advantages in semiconductors and electronics manufacturing, including US-recognised 5G, clean network technology as well as AI, information security and smart cities technology.

He said Taiwan could be an "excellent" partner for India's high-tech supply chain and product development.

"Other areas of potential cooperation include machine tools, photovoltaics, biotechnology and pharmaceuticals. We are looking forward to strengthening cooperation with India in these areas for mutual benefits," he said.

The envoy said India has been actively attracting foreign investment and made every effort to optimise the investment environment with favourable incentives.

"Therefore, specific examples show that Taiwanese major mobile phone manufacturers such as Wistron, Foxconn and Pegatron have successfully moved their production lines to India with the support of India's Production-linked Incentive (PLI)," he said.

He emphasised that both sides can focus on specific areas and bring together related stakeholders, including public and private sectors, academia and think tanks to encourage and strengthen the resilience, security and stability of supply chains for each other.

Ger said Taiwan has been actively pursuing FTA with like-minded trading partners.

"Taiwan's 'New Southbound Policy and India's Act East initiative are instrumental in deepening our bilateral engagement," he said.

"With an increasing domestic labour shortage, Taiwan is looking for a manufacturing partner. India has an abundant talent pool and will make a perfect partner for Taiwan," the envoy said.

He further added that as the world's 22nd-largest economy in terms of GDP and a major semiconductor manufacturer, Taiwan plays a key role in the global supply chains.

The envoy said as a defender of democracy, Taiwan is working to support the rules-based international order.

Though India and Taiwan do not have formal diplomatic ties, the bilateral trade relations have been on an upswing.

In 1995, New Delhi set up India-Taipei Association (ITA) in Taipei to promote interactions between the two sides and to facilitate business, tourism and cultural exchanges.

India-Taipei Association has also been authorised to provide all consular and passport services.

In the same year, Taiwan too established the Taipei Economic and Cultural Centre in Delhi.

The volume of bilateral trade has grown nearly six-fold from $1.19 billion (roughly Rs. 9,807 crore) in 2001 to almost $7.05 billion (roughly Rs. 61,810 crore) in 2018 and India ranks as Taiwan's 14th largest export destination and 18th largest source of imports, according to official data.

By end of 2018, around 106 Taiwanese companies were operating in India, with the total investment amounting to $1.5 billion (roughly Rs. 12,359 crore) in the fields of information and communication technology, medical devices, automobile components, electronics, construction, engineering and financial services.