Trade war making Taiwanese firms move from China to India: Tien Chung-Kwang

US-China trade war is making Taiwanese businesses think about whether to continue in China or move out

Taiwan’s Ambassador to India Tien Chung-Kwang tells Subhayan Chakraborty that his country will continue to discuss a free trade agreement (FTA) with India despite New Delhi’s reluctance to sign new trade deals. Edited excerpts:

Taiwanese manufacturers want to move to India. Why is that?

The trade war between the United States and China is making Taiwanese businesses think about whether to continue in China or move out. They also want less political interference in their business. India is an obvious choice as such interference is least here, and everything goes according to law. Expenses on labour and land are also comparatively cheaper and the domestic market is huge with a growing middle class and increasing purchasing power. So the trend of companies moving their manufacturing to India will only grow.

What is the status of talks on a trade deal?

I’m hoping that Taiwan and India can start talking on the proposed FTA again. In 2013, we completed the feasibility study, done by the Indian Council for Research on International Economic Relations (ICRIER). The study had flagged automotive components, information and communications technology (ICT), logistics, and human resources, among others, as sectors where business can grow.

Currently, there are a couple of people in the government not interested in FTAs. Of course, FTAs are not beneficial for India in the short term. But in the long run, the benefits are significant, and the Indian government sees that.

India has decided to review existing FTAs which have led to greater trade deficit. Have you suggested areas to lower the current deficit India has with Taiwan?

We have told the government that Taiwan can help India in the fields of renewable energy, water treatment and skill training programmes. If India is unwilling to have an FTA right now, we are willing to have a building block model, which allows greater trade step by step.

What about services trade?

Currently there’s no mutual recognition agreement between the nations, but we have signed an MoU with the Association of Indian Universities to improve ties. We have also established 14 education centres in premier institutes like IIT Bombay, IIT Delhi and Amity University to teach the Mandarin language that can help services exports. We will be building more of these, focusing on smaller towns as well.

Apart from tech, which sectors have the potential to draw investments?

Investments have historically been in the ICT space and the first Taiwanese ICT cluster with 120 companies is coming up outside Bengaluru. But now you can expect a more diversified approach. Taiwanese companies have invested in the machine tools, smart machinery, auto parts and artificial intelligence sectors in India and we expect the investments to grow. Traditional sectors, where the Taiwanese manufacturing has an excellent track record, have also entered India. While a Taiwanese shoemaker has set up shop in Tamil Nadu, another company has begun making electric motorcycles.

What is hampering investments right now?

We have been telling India that our companies need a level playing field in terms of manufacturing. Allowing special economic zones exclusively for Taiwanese companies — similar to what has been offered to China and Japan —will attract a lot of business. However, both nations have recently signed a bilateral investment protection agreement.

China has repeatedly complained about India's diplomatic relation with Taiwan? How do you propose to remedy that?

India’s relation with Taiwan and China can run on parallel lines. These two parallel lines should continue, but not at the cost of Taiwan. India and Taiwan are natural partners with no baggage. There aren’t any economic, diplomatic and maritime disputes between the countries. The only thing we need to figure out is how to create an amicable environment for better ties in investments, education, and tourism.

What are the areas where you seek diplomatic cooperation from India?

We have asked for India’s help in securing admission to the World Health Organization. We would also like to secure India’s diplomatic support in gaining access to the global civil aviation framework. A lot of the issues are global in nature, and if one link is missing, it can affect everyone. Taiwan is a travel hub. Every year, 50 million international travellers transit through or visit Taipei and if that link is not secured, diseases like swine flu can spread easily.