News Update

India and Taiwan in between talks on free trade agreement

• ByStartupStory     |    December 20, 2021

India and Taiwan have been negotiating for a free trade agreement to boost economic and diplomatic relations between the two countries in a significant step signalling their resolve to broad-base the overall bilateral economic engagement. This engagement moves parallel to the setting up of a semiconductor manufacturing facility by a Taiwanese firm in India. If the move to set up the semiconductor manufacturing plant succeeds, then it will be the second such facility to be set up by a Taiwanese company in a foreign country after a similar hub in the United States.

The government on Wednesday unveiled a plan to provide incentives worth Rs 76,000 crore to encourage the setting up of semiconductor design, manufacturing and display fabrication (fab) units with a larger goal of making India a global electronics production hub. The Indian government has also proposed a number of sites for the facility and one of Taiwan’s leading semiconductor producers, including the Taiwan Semiconductor Manufacturing Company (TSMC) and the United Microelectronics Corporation (UMC). The move to set up the facility comes amid increasing demands for chips in India by automakers and technology companies, among others, when there is a global shortage of chips.

India and Taiwan have already held two rounds of talks for firming up a free-trade agreement as well as a bilateral investment agreement to boost trade ties. The volume of bilateral trade has grown nearly six-fold from USD 1.19 billion in 2001 to almost USD 7.05 billion in 2018 and India ranks as Taiwan’s 14th largest export destination and 18th largest source of imports, according to official data.

By the end of 2018, around 106 Taiwanese companies were operating in India, with the total investment amounting to USD 1.5 billion in the fields of information and communication technology, medical devices, automobile components, machinery, steel, electronics, construction, engineering and financial services.

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