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Summary of The Case for a Pragmatic India-Taiwan Partnership

Core Content

This working paper by Joe Thomas Karackattu explores the potential for a more cooperative and pragmatic relationship between India and Taiwan, emphasizing the mutual benefits that can be derived from closer economic, cultural, and strategic engagement, while navigating the complex political landscape shaped by China's One China policy.

India and Taiwan share a long-standing historical connection, dating back to the early 20th century, when Indian leaders and the Kuomintang (KMT) engaged in political and cultural exchanges. However, due to the geopolitical realities of the Cold War and the subsequent rise of the People's Republic of China (PRC), India's formal ties with Taiwan have remained limited. The Indian government maintains a policy of non-recognition of Taiwan as a sovereign state, instead promoting "exchanges in trade, investment, tourism, culture, education and other such people-to-­people areas."

Main Points

• India-Taiwan Relations:

  • The relationship has evolved over time, marked by increased economic and cultural exchanges.
  • India and Taiwan have established non-official channels such as the India-Taipei Association (ITA) and the Taipei Economic and Cultural Center (TECC) to facilitate cooperation.
  • Bilateral trade and investment remain modest compared to their respective ties with China, with India-Taiwan trade hovering around 1% of total trade and investment flows being minimal.

• Cross-Strait Dynamics:

  • The PRC continues to claim Taiwan as part of its territory under the One China principle and has historically used diplomatic pressure to limit Taiwan's international participation.
  • Taiwan's New Southbound Policy (NSP), initiated under President Tsai Ing-wen, aims to reduce economic dependence on mainland China and expand ties with Southeast and South Asian countries, including India.
  • The NSP is centered on "innovation, job creation, and more equitable distribution," and includes trade and investment cooperation, people-to-people exchanges, and regional linkages.
  • The PRC has reacted negatively to the NSP, viewing it as a challenge to its One China stance, and has suspended official communication with Taiwan since Tsai's election in 2016.

• Economic Potential:

  • There is significant potential for India and Taiwan to deepen economic ties, particularly in sectors such as electronics, information technology, and manufacturing.
  • Major Taiwanese firms like Hon Hai (Foxconn), MediaTek, and Nan Liu have made notable investments in India, contributing to the country's economic development.
  • The Make In India initiative and the NSP provide opportunities for closer collaboration, especially in the context of India's Act East policy.

• Policy Recommendations:

  • India should treat Taiwan as a consultative partner in its Make In India initiative.
  • Taiwan should leverage the Digital India initiative to develop a South Asian Silicon Valley.
  • People-to-people engagement, including cultural and educational exchanges, can enhance soft power and bilateral relations.
  • A pragmatic and balanced approach is essential to avoid treating Taiwan as a strategic lever against China, which could undermine long-term development goals.

Key Information

• Historical Context:

  • India and the KMT had significant interactions during the Second Sino-Japanese War and the early years of Indian independence.
  • After 1949, India's relationship with Taiwan became more distant due to the PRC's rise and its One China policy.

• Current Engagement:

  • Direct flights between India and Taiwan were initiated in 2003, and several high-profile political visits have occurred since.
  • The India-Taiwan Parliamentary Friendship Forum was established in 2016 to promote "friendship" and cooperation.
  • In 2017, a Memorandum of Understanding (MoU) was signed to promote industry collaboration.

• Challenges:

  • India's One China policy has limited formal diplomatic engagement with Taiwan.
  • Political tensions and protocol issues have occasionally hindered bilateral relations.
  • The PRC has increasingly restricted Taiwan's participation in international organizations and forums.

• Future Outlook:

  • The NSP and Act East policy provide a strategic framework for deeper engagement.
  • Economic diversification and regional collaboration could serve as a foundation for a more balanced and beneficial relationship between India and Taiwan.

Conclusion

A pragmatic and cooperative India-Taiwan partnership, rooted in economic and cultural ties, can enhance mutual benefits and regional stability. While political constraints remain, the potential for growth in trade, investment, and people-to-people exchanges offers a compelling case for expanding the relationship. However, this must be pursued carefully to avoid provoking the PRC and to align with the shared interests of both India and Taiwan in long-term development and regional cooperation.