India-Taiwan Trade Ties 100 Firms Present in India

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By Himanshu Yadav

The India-Taiwan bilateral trade has expanded tremen­dously over the years, with 2009 witnessing the maximum rise. Since the inception of the India-Taipei Association (ITA) in 1995, a sturdy business relationship has been forged between the two countries. India is Taiwan’s 19th global trade partner and its largest in southeast Asia. This year, Taiwan’s exports to India grew by 33.4 per cent, com­pared to last year’s, to reach $2.87 billion in the first quarter.

Both the Indian as well as Tai­wanese governments have launched significant efforts to consolidate their relationship within these sectors. Presently, there are a 100 Taiwanese firms involved in business in India and most of them are focused on the electronics and information technol­ogy segments.

Market scope

Taiwan, being a small island, needs to amplify its business operations to other countries in order to thrive. More than 70 per cent of Taiwan’s economy includes foreign trade and it is imperative for Taiwanese firms to expand their businesses in international locales after setting up base locally.

India, on the other hand, has gained a major footing in the world with its thickening economy, due to which, a number of multinational companies are eyeing it as a potential investment destination. Taiwanese firms, too, are trying to tap this grow­ing market. Taiwan is the the world’s fourth largest integrated circuits (IC) maker and is second, after US, in IC design. Also, the world’s two largest semiconductor companies, Taiwan Semiconductor Company and UMC happen to be Taiwanese. These com­panies can benefit from India due to its easy availability of competent manpower, easy finance schemes and abundant natural resources.  The prosperity of the PC market has given birth to an extensive mar­ket for PC components like mother­boards, chassis, etc. Rajan Sharma, general manager, sales, MB BU, Gigabyte India, says, “PC penetration has gone far beyond metros and big towns. Most small cities, towns and even villages today, are equipped with PCs.”

Also, Taiwanese companies feel that it’s safe to invest in India as the market here hasn’t been majorly impacted by the economic downturn, unlike US and Europe. These compa­nies are also keen to invest in hi-tech and labour intensive industries by virtue of the vast pool of talented manpower and resources available. Another essential potential area of business for Taiwanese firms can be the automotive segment as Taiwan companies have a major presence there.

Challenges ahead

Major barriers that hinder Taiwan­ese firms from setting up business in the Indian market are poor in­frastructure, confusing investment policies and cultural differences. These factors impel Taiwanese firms to look towards south Asian markets like China, Malaysia, Thailand and Vietnam.  Taiwanese firms feel that cultural barriers can still be overlooked if the Indian government constructs a more feasible business atmosphere for foreign investors. According to them, the government needs to develop a sound infrastructure and provide high technology for R&D activities. Also, the investment policies need to be made more transparent as one of the key deterrents for Taiwanese companies is the high and unclear tax structure.

Government role

The two countries are currently working on two agreements—Double Taxation Avoidance and ATA Carnet. Taiwan is also working on a mutual recognition agreement to recognise past records of electronics products and companies of both countries.  Trade shows and exhibitions can also facilitate an improved relation­ship between the two nations as they give a platform to companies of both sides to showcase their latest technologies and offerings.

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