Taiwan and India have a lot in common. Both are vibrant democracies, with a booming technology sector and possess high-quality human capital. There are also commercial synergies to explore as Taiwan seeks to diversify its investment destinations while India seeks to shore up the hardware focus in its technology sector through the Make-in-India scheme.
The Chairman of Taiwan External Trade Development Council, James Huang, had even dubbed India the ‘jewel’ in the Taiwanese government’s New Southbound Policy (NSP). Yet, it appears more could be done to augment this commercial relationship.
On April 8, we hosted BV Naidu, Anku Jain, Sana Hashmi, and Stanley Wang for a roundtable discussion on Taiwanese investments in India. The discussion explored investment opportunities for Taiwanese companies in India, possible obstacles, and what more can be done to boost investment from Taiwan to India. The discussion was moderated by Konark Bhandari.

Discussion Highlights

  • Reflections on Current Investment Scenario: Participants opined that in the current era of US-China trade conflict wherein Taiwanese companies are being incentivised to pull out of China, India and Taiwan have a distinct opportunity to improve bilateral trade and investments, which were dormant for a long time and have only recently begun improving. They posited that India and Taiwan have always had good relations and a shared cultural understanding, which can be further fueled by additional investments and partnerships in sectors beyond medical supplies, electronics, steel, etc., which both countries already engage with each other on to a certain degree. Participants deemed that this was the time for Taiwan to take advantage of the open investment environment created by the Indian government and industry in in the semiconductor industry, and overturn the underutilised potential of India’s talent pool, skilled workforce, stable political and economic environment, market access to 1.3 billion people, and global status as an IT hub.

  • What are the Limitations?: Participants were quick to point out that investment ties between India and Taiwan still remain abysmally low – Taiwan is India’s 32nd largest investment source and currently retains only 116 companies in significantly larger India, as compared to the 11,000 Taiwanese companies in much smaller Southeast Asian countries. Participants considered that Taiwanese businesses may prefer trading with Southeast Asia over India due to a cultural familiarity and ease of engagement resulting from linguistic and geographic proximity. Apart from these, reasons for India being a secondary investment choice for Taiwan were identified to be structural factors in India like bureaucracy, red tapism, and a lack of framework and infrastructure, as well as dichotomous engagements between Taiwanese industry and governments and a lack of or passive involvement of the latter. Moreover, participants believed that there may be gaps between the intention and actual realisation of proposed investment, which leads to complications in the timely implementation of projects in the long term. Participants also judged the situation from the Taiwanese viewpoint, underscoring the fact that technology investment and market trends were not dependent on semiconductor supplying hubs like Taiwan or large consumer bases like India, but rather on product companies primarily based in the US, China, Japan and South Korea, so an oversimplification of Taiwanese investment options should be avoided.

  • Oiling the Gears – Opportunities to Boost the Commercial Relationship: Despite gaps and complexities, participants noted that the creation of several incentives and avenues for Taiwanese investments were underway. They highlighted overarching diplomatic developments such as the Bilateral Investment Agreement 2018 (BIA) for direct and indirect Taiwanese investments in India; Taiwanese policy approaches such as its New Southbound Policy 2016, which aims to encourage Taiwanese investments in south and southeast Asia; as well as schemes introduced by the Indian government specifically to incentivise and ease investments in the semiconductor industry, such as the Design Linked Incentive (DLI) and Production Linked Incentive (PLI) schemes. Participants also emphasised other incentivisation measures undertaken by the Indian government, such as ample funding, capital subsidies, concessional rates for the use of land, electricity and power for semiconductor fabrication (fab) facilities, and the setting up of a high-level advisory committee to advance the ambitious Semicon India project. Moreover, participants stressed that the Make in India initiative has resulted in several offshoot projects, funding and incentives specifically for potential investments in semiconductor and display manufacturing, which are projected to lead to numerous new partnerships and production units in the country. With the improvement in India’s Ease of Doing Business Ranking as well as a 60% increase in India-Taiwan trade value recently, participants were carefully optimistic about these measures and efforts kickstarting a flourishing bilateral investment relationship.

  • India-Taiwan Investment Wishlist: To conclude the discussion, participants were asked to curate a catalogue of measures and efforts that they think should be introduced or retained to stimulate Taiwanese investments in India. Participants stressed on retaining and furthering the measures and programmes that are already planned and implemented, and ensuring that there are more efforts in infrastructure, coordination amongst departments, ministries and industries, and better communication between governments and industries of both countries. More targeted endeavours that could be introduced included establishing free trade agreements (FTAs), altering Indian import tariffs to combat the competition with south east Asia, integration of Indian and Taiwanese investment incentives into the New Southbound Policy, and the need for a significant push for investment in India from the Taiwanese government. Participants also deliberated on the fact that the Taiwanese industry tends to want to see profitable outcomes in the short term, so another option to further commercial ties apart from pursuing investment through incentivisation could be to identify potential openings for joint projects financed by both countries.

This event summary was prepared by Shimona Mohan, a research intern with the Technology and Society Program at Carnegie India.