GS Paper - 2 (International Relations)

India and Taiwan have started negotiations for a free-trade agreement and the setting up of a semiconductor manufacturing facility by a Taiwanese firm in India, in a significant step signaling their resolve to broad-base the overall bilateral economic engagement.

What

  1. If the move to set up the semiconductor manufacturing plant succeeds, then it will be the second such facility to be set up by a Taiwanese company in a foreign country after a similar hub in the United States.
  2. The Indian government has already proposed a number of sites for the facility and one of Taiwan's leading semiconductor producers.
  3. The move to set up the facility comes amid increasing demands for chips in India by automakers and technology companies, among others, when there is a global shortage of chips.
  4. The government on 15 December 2021 unveiled a plan to provide incentives worth Rs 76,000 crore to encourage the setting up of semiconductor design, manufacturing and display fabrication (fab) units with a larger goal of making India a global electronics production hub.
  5. India has been promoting its ties with Taiwan in the areas of trade, investment, tourism, culture, education and people-to-people exchanges.

Flashback

  1. India does not have formal diplomatic ties with Taiwan but both sides have trade and people-to-people ties.
  2. In 1995, New Delhi set up the India-Taipei Association (ITA) in Taipei to promote interactions between the two sides and facilitate business, tourism and cultural exchanges.
  3. The ITA has also been authorized to provide all consular and passport services.
  4. In the same year, Taiwan too established the Taipei Economic and Cultural Center in Delhi.