Mint Explainer: Why is PM Modi’s message to the ‘people of Taiwan’ significant?

Although India does not officially recognise the island democracy that’s home to 23 million people, it has been more willing to engage with Taiwan in recent years. Here’s a brief history of the relationship and why their unofficial ties are stronger than ever.

Why does India not recognise Taiwan?

India’s lack of formal diplomatic relations with Taiwan stems from Beijing’s One China Principle, in which it claims Taiwan as an inalienable part of its territory and bars countries hoping to establish diplomatic ties with it from also having relations with Taiwan.

India has maintained formal diplomatic ties with China since 1949. It was only in 1995 that it established the India-Taipei Association to facilitate business, tourism and cultural exchange with Taiwan. Taiwan also maintains the Taipei Economic and Cultural Centre (TECC) in India, with offices in Delhi and Chennai.

What does India do with Taiwan?

Cooperation with Taiwan has always been a sensitive issue in New Delhi, given its concerns about China’s reaction. However, India’s engagement with Taiwan has increased in recent years – albeit while ruling out the possibility of formal ties.

Taiwan’s semiconductor firms have been closely involved in the Indian government’s efforts to carve out a place in this lucrative industry. In February the Indian cabinet approved a proposal for Taiwan’s PowerChip to partner with the Tata group to build India’s first semiconductor fab in Gujarat.

India and Taiwan have also signed a labour mobility agreement that will allow Indian workers to find jobs in the island country. Engagements between the two countries have also started to attract more attention, such as when three retired Indian service chiefs visited Taiwan for a conference last year. External Affairs Minister S Jaishankar also recently acknowledged the increase in cooperation with Taiwan.

“The government of India’s policy on Taiwan is clear and consistent. Government facilitates and promotes interactions in areas of trade, investment, tourism, culture, education and other such people-to-people exchanges,” the Ministry of External Affairs said about India’s relationship with Taiwan in 2021.

What is driving this change?

Taiwan’s dominant position in semiconductors is one of the primary reasons India has increased its engagement of late, as is its desire to attract foreign investment in general.

India’s political troubles with China are probably also playing a role here. The two countries have spent the last four years locked in a border standoff that has frozen bilateral relations. As such, India may acquire from this a greater risk tolerance in dealing with Taiwan, even at the expense of a negative reaction from China.