Taiwan: Taiwan-India economic ties growing
Ours is an era of economic interdependence. Pragmatism demands that nations move toward globalization. The maxim is: integrate or perish. Motivated in part by this reality, bilateral economic ties between India and Taiwan have come a long way since the India-Taipei Association and the Taipei Economic and Cultural Center were founded in Taipei and New Delhi, respectively, in 1995.
Thanks to their efforts and those of other organizations--including the Confederation of Indian Industry and, in Taiwan, the Bureau of Foreign Trade, the Taiwan External Trade Development Council, the Taiwan Association of Machinery Industry, the Taiwan Turnkey Project Association, the Taipei Computer Association, and the Institute of Information Industry--trade between India and Taiwan grew by 33 percent between 1995 and 2002, and, in 2003 alone, the annual bilateral trade volume jumped by over 16 percent to reach US$1.4 billion. Moreover, it is expected to grow by another 20 percent this year.
Taiwan's major exports to India are mechanical appliances, electrical equipment, textiles, plastics, automobile parts and artificial fibers. India's major exports to Taiwan are cotton yarn and cloth, iron ore and iron products, granite and chemicals.
Taiwan's foreign direct investment in India has also increased over the years, from US$22 million in 1996 to US$74 million in 2002. With the signing of an investment protection agreement in October 2002, an increasing number of Taiwanese companies have shown keen interest in investing in the computer, telecommunications, electronics, chemical and other industries.
India and Taiwan have only begun to cash in on the full potential of bilateral trade and investment promotion. India could serve as an important source of agricultural products, dyes, machine parts, building materials, software and automobile components. Taiwan could increase its exports of machine tools, dies and molds, synthetic fabrics, electronic components and IT products and plastic-injection, packaging and food-processing machinery.
Currently the world's 16th-largest economy and third-largest holder of foreign exchange reserves, amounting to over US$215 billion, Taiwan is eying India's potentially huge market as a major investment destination. Major areas for possible joint ventures include chemicals, metal casting for the automobile industry, sports equipment, banking and financial services, plastics, food processing, and soybean oil production. One of the most promising areas of future cooperation is computer software and other information technologies. Efforts made in this direction are likely to give "IT" a new meaning--India and Taiwan.
India might also benefit from Taiwan's experience in reinvigorating its economy and expanding employment, including encouragement of research and development and innovation, enhancement of global logistics capabilities, establishment of free ports, institution of land reform and conservation programs, promotion of job-skill upgrading and subsidizing small and medium-sized businesses to help relieve unemployment.
It appears that New Delhi and Taipei are determined to take steps to further facilitate economic interaction between the two countries. To boost trade and investment ties, New Delhi appreciates the need to sign pacts with Taipei regarding avoidance of double taxation and adoption of the ATA Carnet system--the issuance of international customs documents or "merchandise passports" facilitating duty-free and tax-free temporary import of sample goods for up to one year. According to sources, a memorandum prepared by the Federation of Indian Chamber of Commerce and Industry urging action on such agreements has already won the support of India's commerce, finance and external affairs ministries. The Ministry of Finance is expected to formally give its approval to the federation's proposal.
There is apprehension in certain quarters in India that improvement of economic ties between India and Taiwan will offend the People's Republic of China. Such fears are baseless, however, inasmuch as many nations do business with Taiwan without fear of incurring China's displeasure or retribution. Officials from many advanced nations are actively working with their Taiwanese counterparts to boost trade and investment relations.
China's next-door neighbor Vietnam, for one, has no compunctions about wooing Taiwanese investors, having signed accords with Taiwan aimed at protecting Taiwanese investors and preventing double taxation. Consequently, Taiwan surpassed Singapore in 2002 to become the No. 1 foreign investor in Vietnam.
Moreover, it would be ironic for China to attempt to dissuade India from developing economic ties with Taiwan inasmuch as in all of Asia, the country most eager to curry favor with Taiwanese businesspeople is none other than China itself. In late December, Beijing rolled out the red carpet for 70 heads of Taiwanese chambers of commerce in China, inviting them to a conference designed to reassure the Taiwanese business community of how valued their presence is. China's provincial governments have also been keen on promoting economic ties with Taiwan, even going so far as to send delegations to Taiwan to talk business.
--Jagdish Singh is assistant editor and special correspondent to the National Herald in New Delhi.