India should strengthen ties with Taiwan

G Parthasarathy | Updated on May 19, 2020

Taiwan can assist in semi-conductor manufacture, which is vital to loosen China’s grip on our electronics and telecom sectors

As the coronavirus menace makes lives difficult and miserable for millions of ordinary people around the world, the US and China are involved in an ugly spat, over who is responsible for the carnage that threatens the welfare, well-being and lives of millions across the world.

President Trump has made it abundantly clear that the Chinese are responsible for creating the virus, though nobody appears clear whether it was the creation of a research project in Wuhan on bats, which went horribly wrong, or the creation of the unhygienic conditions in Huanan Seafood Market in Wuhan. The seafood market reportedly sells a variety of meat products, including bats, foxes, frogs, pigs, porcupines, snakes and turtles.

China denies any role in triggering the Covind-19 tragedy, which could well be true. But it faces continuing criticism from angry populations across the world, including from irate Africans, whose people faced racist attacks after the crisis broke. But the worst manifestations of hypocrisy have come from sanctimonious countries in the Islamic world, including Iran and Pakistan. Both have remained silent as Muslims continue to be ruthlessly persecuted just across their borders, in China’s Xinjiang Province. The Trump Administration, in turn, cannot absolve itself of responsibility for initially underestimating the seriousness of the issues and then playing crass and polarising electoral politics, with the safety, security and lives, of its own citizens.

India has become a victim of these developments, despite its best efforts to contain the fallout of the Wuhan crisis. These developments came at a time when New Delhi and Beijing were attempting to bridge long-standing differences. China was meanwhile, busy seeking to expand its economic profile in India, in areas like telecommunications, infrastructure and energy.

India’s smartphone industry is dominated by four Chinese smartphone brands — OPPO, Xiaomi, Vivo and Huawei — with some competition from South Korea’s Samsung. India’s concerns, however, arise from moves led by the Chinese electronics monolith Huawei, , seeking domination of India’s entire communications infrastructure. Huawei makes no secret of its determination to increasingly penetrate India’s electronics and communications sectors and even seeks an important role in development of artificial intelligence. It employs an estimated 3,000 workers in Bengaluru.

A major feature of Huawei’s operations is that Indians occupy junior staff positions while its higher management is dominated by exclusively the Chinese. There is no transfer of technology and the Chinese aim is really to secure control of India’s telecommunications and internet networks, by establishing and controlling 5G telecommunications systems in India. This, by any yardstick, is unacceptable

One of the major reasons for China seeking this domination over telecommunication networks in India, is that India has failed in being able to produce the basic components of present-day communications networks — semi-conductors. India imported electronics equipment and components amounting to around $50 billion in 2019.

But any country aspiring to be a leading player in the electronics industry, which is the centrepiece of modern industrial state today, can move ahead rapidly when it has indigenous capabilities to manufacture semi-conductors — capabilities which India lacks. India is, therefore, unable to be globally competitive, like China, South Korea or Japan, in a vast range of electronics products.

Ties with Taiwan

The only government which has these capabilities and has been willing to cooperate with India in this field is Taiwan. While India has its own strengths and capabilities in the indigenous designing of computer chips, it has not yet been able to finalise a partnership with Taiwan, on fabrication of semi-conductors. The less said about the confusion and interplay of rivalries and commercial interests that mark our relations with Taiwan, the better.

The offshore territory of Taiwan was the only part of the territory that China’s Communist rulers claimed in 1949, which has remained under non-communist control, for seven decades. Taiwan retains its notional independence, thanks to continuing American military support. China does not have the confidence that it can militarily take over Taiwan, which is a functioning democracy, with an American equipped military, which China cannot easily overrun. India decided to post an official representative to Taiwan when the reformist Prime Minister Narasimha Rao, chose to do so. Virtually every neighbouring country including China itself, Japan and the US, amongst others, have extensive economic ties, marked by growing trade and investment, with Taiwan.

The Indian diplomatic and political establishment have chosen not to develop economic ties with Taiwan to their full potential, because of their apprehensions of China’s reactions. There are also, one fears, business and other extraneous considerations that have prevented us from going ahead with the vital project for the indigenous production of semi-conductors, which are vital for the development of the electronics sector in our economy. It is immaterial if the plant is in the public or private sector. It is an imperative national need.

The time now appears propitious for us to get the ball rolling on this project. According to American analysts, Taiwanese President Tsai Ing-wen, who has just been re-elected for her second term, remains steadfastly committed to engaging the mainland from a position of equality. She is determined to retain Taiwan’s traditional autonomy. Taiwan was one of the first to offer India key medical equipment last month. We need work closely with Taiwan, while developing key industries like semiconductors and in building new supply chains with the US, Japan, South Korea and others.

The present role of China in key areas of India’s economy, like communications and energy, should be suitably modified or phased out unless China agrees to include provisions for technology transfer.

Focus on self-reliance

Prime Minister Modi is now placing increasing emphasis on attaining “self-reliance,” as being a crucial aim of our economic policies, in coming years. This is only inevitable as the prospects for growing demand abroad for our exports are limited in the immediate future, with economies across the world under siege.

Moreover, with capital markets worldwide also coming under siege, the prospects for increasing Foreign Institutional Investment also appear bleak, at present. It would be only natural for India to benefit from contemplated moves by the US, its European allies and Japan, to shift away from Chinese dominated industries and supply chains. India needs to keep a close eye on these developments. It also has to liaise closely with the US, EU and Japan for enhancing investment flows and establishing new global supply chains.

The writer is a former High Commissioner to Pakistan

Published on May 19, 2020

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