Taiwan's courtship with India-II
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Issue Book Excerpt: Rising India | Date : 07 Dec , 2010

Major Advantages: First, given the importance of China in Indian foreign policy, Indian policy makers, foreign policy analysts and think tanks must understand Beijing well. This is particularly so when India does not have China-experts worth the name. The best way to improve this situation is to interact with the Taiwanese scholars who are considered to be among the best China-watchers in the world.

Also read: Taiwan’s courtship with India-I

Of course, over the last few years, Taiwan and India have made some headway in educational exchanges.Other than their contacts with a number of leading Indian universities, Taiwan’s research institutes and think tanks have expanded their presence in India. Indian think tanks and bodies like the Institute for Defence and Analyses Studies, the Observer Research Foundation, the Confederation of Indian Industries, the India International Center, the Center for Policy Research and the National Institute of Advanced Studies, among others, have exchange programmes with their counterparts in Taiwan. However, these interactions, welcome no doubt, need to be much more intensified to assume meaningful dimensions.

China has always sought to marginalize India as a “South Asian power” and block its ambition of playing a major role in the Asia-Pacific”¦

Secondly, there can be mutually beneficial exchanges of information between the intelligence agencies and militaries of India and Taiwan on a range of issues such as terrorism, cyber-hacking, navigation security and sea-piracy. Similar exchanges take place between the Taiwanese agencies and their counterparts in the U.S., South Korea and Japan, to name a few. Even if one treats the interactions between Taiwan and the U.S. as unique and quite complex, the fact that Tokyo and Seoul share strategic information with Taipei is interesting in the sense that they have much more at stake than New Delhi in maintaining friendly relations with Beijing, considering their quantum of trade with and investments in mainland China, let alone their geopolitical links. Beijing may not like such interactions, but then the overall national interests of a country in cultivating relations with another must not be made hostage to the Beijing-factor. The point is if Japan and South Korea can do it, why not India?

Thirdly, there is tremendous scope for economic and technological cooperation between India and Taiwan, which is not making much progress because of New Delhi’s slowness in the conclusion of bilateral agreements on investment protection and avoidance of double-taxation. A country which is trying hard to reduce the overwhelming dependence of its economy on agriculture, India has a lot to learn from the Taiwanese phenomenon of its small and medium sized industries accounting for 98 percent of all business in the country, 80 percent of all business employment, and 25 percent of all direct export value. India could attract Taiwan to its software industry, particularly when Indian software giants are looking for alternate markets for collaboration following the recession in the Silicon Valley.

By transferring nuclear weapons, missiles and other equipment to Islamabad, it (China) has skillfully transformed the India-China nuclear debate into an India-Pakistan contest.

This is all the more so since many thinking Taiwanese are now having second thoughts about their growing investments in mainland China. With unemployment hitting 4.92 percent in 2001 in Taiwan, highest in the country’s history, and the stock market losing 50 percent its value, President Chen Shui-bian has been forced to loosen the restriction of 50 million dollars cap on individual Taiwanese investments and lift the ban on the country’s high-tech manufacturers from building semi-conductor plants in the Chinese mainland. Chen has also allowed mainland capital to enter Taiwan’s troubled property and stock markets.

However, in the process, a growing number of the Taiwanese doing business in the communist China have become, as has been mentioned in the beginning of this essay, potential hostages of Beijing in future. There is now a clear possibility of mainland communists “buying” parts of Taiwan or its corporate world. There is also the fear that the Taiwanese products could lose technological edge and innovation in the long run if their businessmen continue to engage in low-added value production activities in the mainland because of the cheap labour and establishment costs there.

Also read: Indo-French Partnership to Friendship

The point is that since technological innovation is the key component to long-term sustained growth in this age of competitive globalisation, Taiwanese businessmen deepening their ties with communist China, which is weak at innovation, will be suicidal after some years. The solution lies in establishing strategic R&D alliances with global innovation centres. And here, the prospect of collaboration between Taiwanese hardware and Indian software could be extremely promising.

Taiwan can extend its economic space and cope with population ageing by taking advantage of Indias relatively young manpower through outsourcing and off-shoring many activities.

Fourthly, there are demographic complementarities between India and Taiwan. The latter has been experiencing below replacement rate fertility levels of around 1.6 (and declining) for many years. Average life expectancy is 77 years and increasing. The elderly will make up 20 percent of the total population of Taiwan by 2020, and this will imply an increase in median age and a reduction in working age persons to the total population ratio.  In contrast, India is in a demographic gift phase, with rising working age to total population ratio till 2045. Even after that, its ratio will decline quite slowly, and the ratio will remain higher than for Taiwan.

Taiwan can extend its economic space and cope with population ageing by taking advantage of India’s relatively young manpower through outsourcing and off-shoring many activities. These may range from routine Business Process Outsourcing (BPO) types to those involving such activities as research, and design. Many MNCs, including those from China, are basing their research and design centres in India. Taiwan’s participation in selected areas of research and design could provide win-win opportunities. It is said in this context how a portion of Taiwan’s pension assets, which are projected to be US$150 billion by 2015, can be invested in India to obtain high returns. These in turn can assist in achieving financial security for the aged in Taiwan.

Strange comparison of Taiwan with Kashmir

Whichever angle one may look from, India can have an active relationship with Taiwan to promote its national interests. There is, of course, a theory running in the Indian Foreign Office that New Delhi cannot behave normally with Taipei, since by doing so China could retaliate by fishing in the troubled waters of Kashmir. Nothing can be more bizarre than this comparison of Kashmir with Taiwan.

“¦Beijing covertly (with the help of the intelligence services of Pakistan and North Korea) funded Nepals Maoist rebellion, which is inimical to Indian interests.

Kashmir has been an inalienable component of Indian civilisation from time immemorial. Kashmir’s de facto and de jure status is coterminous with that of India. However, this is not the case with Taiwan. No regime in China’s thousands years of history had ever any effective control over Taiwan. In fact, until 1895, when China “ceded” (claimed to cede) Formosa (ancient name of Taiwan) to Japan in perpetuity, no Chinese family from the mainland was allowed to migrate to Taiwan. More interestingly, when Japan relinquished its sovereignty over Taiwan (after her defeat in the World War II) under the San Francisco Peace Treaty of 1951, it just relinquished its sovereignty over Taiwan without transferring it back to China.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Prakash Nanda

is a journalist and editorial consultant for Indian Defence Review. He is also the author of “Rediscovering Asia: Evolution of India’s Look-East Policy.”

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