Skill shortage, tariffs, red tape deter chip makers' entry in India: Taiwan

Taiwan's Foreign Minister suggested that India should prioritise streamlining its administrative processes and regulations to facilitate semiconductor investments

A top Taiwanese government representative highlighted several obstacles, including a shortage of experienced engineers, steep tariffs on electronics component imports, and inadequate infrastructure, that India must overcome before attracting significant investments from chip companies based in the island territory. 

According to an Indian Express report, Joseph Wu, Taiwan’s Minister of Foreign Affairs, suggested that India should prioritise streamlining its administrative processes and regulations to facilitate semiconductor investments. 

Additionally, Wu urged India to focus on finalising a long-discussed free trade agreement with Taiwan, which would ease the import of components, equipment, and materials for companies in the semiconductor supply chain.

“India is known to be very cumbersome in its administrative structure and it would require for the Indian government to look at that too, to streamline all kinds of laws and regulations to help semiconductor investors coming to the country,” IE quoted Wu as saying.

Discussions with Taiwanese government officials and industry leaders regarding India’s aspirations in the chip sector revealed a distinct implication: Taiwan sees India as a promising investment prospect, particularly within the electronics domain. However, reservations among businesses from the island nation have thus far hindered their entry into New Delhi, the report claimed. 

The foundation of Taiwan’s Hsinchu Science Park, housing TSMC, UMC, and others, relies heavily on robust infrastructure. It includes essential facilities for suppliers providing gases and water, along with educational institutions, residential areas, and a vibrant nightlife, all designed to attract and retain engineers from across the globe.

Wu emphasised the importance of infrastructure, particularly in India, highlighting concerns within the semiconductor industry about the consistent availability of water and electricity, as well as the necessity of reliable transportation.

He cited the example of the Taiwan High Speed Rail (THSR) in 2007, which facilitated TSMC engineers’ seamless travel between Hsinchu, Tainan, and Taichung, enabling frequent cross-facility support.

“So if the Indian government is serious about putting all this together, I’m sure it is going to be very attractive to the semiconductor industry to think about investing in India,” he told IE.