India and Taiwan have started negotiations for a free trade agreement and the establishment of a semiconductor manufacturing center in an Indian city, signaling their determination to further expand bilateral economic engagement.
If the decision to establish the semiconductor manufacturing plant is successful, it will only be Taiwan’s second such installation in a foreign country after its production center in the United States, people familiar with the development have said. .
The Indian government has already proposed a number of sites for the installation and one of Taiwan’s leading semiconductor producers, including the Taiwan Semiconductor Manufacturing Company (TSMC) and the United Microelectronics Corporation (UMC), may implement is implementing the mega project, they said.
Taiwan is a major player in the production of chips globally. According to industry estimates, TSMC manufactures approximately 50 percent of all semiconductors in the world.
“There is strategic importance in trying to consolidate the FTA and set up the semiconductor hub,” said one of the people named above.
Taiwan considers itself a sovereign state. However, China claims Taiwan as part of its territory.
The decision to set up the facility comes amid growing demand for chips in India by automakers and tech companies, among others, as there is a global shortage of chips.
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People said the proposal to create the semiconductor hub was driven largely by the strategic importance of India-Taiwan ties rather than the commercial aspect of it.
“The semiconductor plant in the United States was established to reflect the close strategic ties between the two sides. The same will be true of India as well,” said one of the people quoted above. -above.
The United States has been steadfast in its relations with Taiwan in the face of increasing Chinese hostilities and reassured Taipei of its continued support.
The government on Wednesday unveiled a plan to provide incentives worth Rs 76,000 crore to encourage the establishment of semiconductor display design, manufacturing and manufacturing (fab) units in the broader goal of making India a world center for electronics production.
In line with their desire to expand their economic engagement, India and Taiwan have already held two rounds of talks to firm up an FTA as well as a bilateral investment agreement to strengthen trade ties, residents said.
India has promoted its ties with Taiwan in the areas of trade, investment, tourism, culture, education and people-to-people exchanges.
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Cooperation in the fields of trade, investment and industry between India and Taiwan has intensified in recent years.
Bilateral trade volume has nearly six-folded, from $ 1.19 billion in 2001 to nearly $ 7.05 billion in 2018, and India ranks 14th among Taiwan’s export destinations and 18th among sources of imports, according to official data.
At the end of 2018, around 106 Taiwanese companies were operating in India, with a total investment of USD 1.5 billion in the fields of information and communication technology, medical devices, automotive components, machinery, steel. , electronics, construction, engineering and finance. services.
The two sides have also set up teams to further develop links in education as well as skills development training.
Currently, around 2,800 Indian students are studying in Taiwan.
India does not have formal diplomatic relations with Taiwan, but the two sides do have business and people-to-people relations.
In 1995, New Delhi established the India-Taipei Association (ITA) in Taipei to promote interactions between the two parties and facilitate trade, tourism and cultural exchanges.
The ITA was also authorized to provide all consular and passport services.
In the same year, Taiwan also established the Taipei Economic and Cultural Center in Delhi.
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