Taiwanese firms shift supply chains to India amid tensions with China and Taiwan and India deepen their relationship

This strategic move comes as Taiwan and India deepen their economic relationship.  In response to the ongoing trade conflict between the United States and China, Taiwan’s foreign direct investment (FDI) in India has surged to over $665 million in the five years leading up to 2023. This is a significant increase compared to the nearly $277 million invested in India by Taiwan between 2006 and 2017, according to Huang.

While India does not have formal diplomatic ties with Taiwan, due to China’s claim over the island, the two have cultivated a robust business relationship. India, eager to bolster its manufacturing sector, is particularly interested in attracting investments from Taiwan, a major player in the semiconductor industry.

This year, Taiwan’s Powerchip Semiconductor Manufacturing Corp partnered with India’s Tata Group to establish the first semiconductor fabrication facility in Gujarat. This project is supported by a $10-billion incentive scheme from the Indian government.

Huang highlighted additional collaborative efforts, including programs to train Indian students and professionals in Taiwan’s semiconductor industry, paving the way for future cooperation.

The shift in Taiwan’s supply chains has primarily targeted the mobile telephone assembly and footwear industries. In the fiscal year ending March 2024, two-way trade between India and Taiwan reached $10.1 billion. The economic partnership between Taiwan and India continues to grow, reflecting a strategic realignment of supply chains amid global trade challenges and regional tensions.