Taiwanese companies are shifting their supply chains from China to India, driven by the rising global trade tension and the strengthening economic ties between Taipei and New Delhi. This move reflects a growing trend of businesses seeking to diversify their operations and mitigate risks associated with geopolitical instability. James Huang, the chairman of the Taiwan External Trade Development Council, highlighted this trend in an interview with Reuters. He revealed that Taiwan’s foreign direct investment (FDI) in India has surged to over $665 million in the five years leading up to 2023, a significant increase compared to the $277 million invested during the decade from 2006 to 2017. This surge indicates a clear shift in Taiwanese companies’ investment priorities, with India emerging as a favored destination for relocating manufacturing operations.
India’s robust manufacturing sector and its ambitions to become a global manufacturing hub are attracting Taiwanese companies seeking to expand their operations outside China. The Indian government’s initiatives to attract foreign investment and its focus on developing a domestic semiconductor industry have created a favorable environment for Taiwanese businesses. One notable example of this shift is the partnership between Taiwan’s Powerchip Semiconductor Manufacturing Corp and India’s Tata Group. They have joined forces to build the first semiconductor fabrication facility in western Gujarat state, leveraging India’s $10 billion incentive scheme for semiconductor manufacturing.
Beyond the semiconductor industry, Taiwan’s supply chain shift to India has also impacted other sectors such as mobile phone assembly and footwear manufacturing. The two countries have established a close economic partnership, with two-way trade between India and Taiwan reaching $10.1 billion during the fiscal year ending in March 2024. Taiwan is actively promoting collaboration in the field of semiconductor technology by offering training programs for Indian students and professionals in Taiwan. This initiative aims to nurture a future generation of skilled workers, strengthening the technological foundation for future cooperation between the two nations.
The growing economic relationship between Taiwan and India is a significant development in the global economic landscape. It reflects the increasing interconnectedness of nations and the dynamic shifts in global trade patterns. The move by Taiwanese companies to diversify their supply chains and establish a strong presence in India is likely to have a lasting impact on both economies, driving innovation and economic growth in the years to come.
