There is something seriously wrong with the way the Modi government is appeasing China. After the avoidable ignominy over the issue of repealing visa to the Uyghur activist Dolkun Isa, the government has committed another faux pas by first accepting the invitation and then backtracking from sending two parliamentarians to attend the swearing-in ceremony of Taiwanese president-elect Tsai Ing-wen. The first female president of the island nation was sworn in on 20 May.
In fact, the government had already announced the names of DP Tripathi (of the Nationalist Congress Party) and Meenakshi Lekhi (of the Bharatiya Janata Party) for the event. But subsequently, it changed its mind and disallowed the two MPs from visiting Taipei.
One does not need to become a Nobel laureate to understand that it is the fear of China that has done the trick. As in the case of Dolkun Isa, this time too the Modi government realised its “folly” of antagonising Beijing particularly when President Pranab Mukherjee is all set to visit China on 24 May. The question thus is: If the government is so scared of China, then why does it unnecessarily initiate an action that displeases Beijing?
Strange it may seem, but it is true that the BJP, a supposedly nationalist party, whenever in power in Delhi, has always disgraced the country while dealing with China. For instance, until 2003, India’s standard position on Tibet was that it is an autonomous region of China, meaning that India’s view on Tibet could change if Beijing takes away Tibet’s autonomy. But Atal Behari Vajpayee, during his visit to China in 2003, agreed unconditionally that “Tibet Autonomous Region (TAR) is part of the territory of the People’s Republic of China (PRC)”. And what is more important, such an agreement on Tibet was signed for the first time at the prime ministerial level.
It seems that this sordid history is being repeated under the second Prime Minister from the BJP, Narendra Modi. It is true that India follows the ‘One China’ policy and does not recognise Taiwan as a country. In the absence of formal diplomatic relations, India and Taiwan coordinate their relations through their respective Economic and Cultural Centers in each other’s capital. But within these broad parameters, it is to the credit of the previous Manmohan Singhgovernment that New Delhi was successfully de-hyphenating its policy towards Taipei from its China-policy. In March 2011, India had announced to forge a Free Trade Agreement (FTA) with Taiwan, while denying the same to China. And ignoring China’s protest, India approved in December 2012 the opening of a branch office of the Taipei Economic and Cultural Centre in Chennai.
In fact, this process of de-hyphenation was supposed to gain further momentum under Modi. But that does not seem to be happening. And that too at a time when for the first time a Taiwanese president on her inauguration day has specifically mentioned India in what will be her priority of developing a “South-bound policy” (towards Southeast Asia and India) to restructure the island nation’s economy by “bidding farewell to the single market phenomenon (meaning China)”.
Incidentally, it was again the Vajpayee government that had belittled Taiwan when, in 2001, the then Taiwanese vice-president Annette Lu was disallowed to visit the earthquake-affected people of Gujarat with relief material worth more than $ 1 million. And this was apparently due to the fear that the communist China would not like her visit to India. This was rather strange, considering the fact that China’s total relief-help for Gujarat was $60, 000, whereas the $1 million worth relief material that the Taiwanese vice-president was sending in her “personal capacity” was the gesture of a single voluntary organisation called ‘Love and Care’ whose chairperson happened to be Ms. Lu.
The small-sized island of Taiwan, with 23 million people, has emerged as a formidable economic powerhouse in the Asia-Pacific region. Taiwan is the world’s 16th largest economy and fifth largest economy in Asia (after China, Japan, India and South Korea). It has the world’s third largest foreign exchange reserves with more than $255 billion. It is the world’s fourth largest IC maker globally, and the second after the United States in IC design. Taiwan leads the world in market share output of 23 IT items, with the result that every 8 out of 10 computers in the world use some Taiwanese system or the other. Above all, Taiwan is one of the largest investors all over the world. Its per capita income of $15,000 is among the world’s highest.
It may be noted that Taiwan’s leading businessmen constitute the largest source of investments in China, the unofficial figure amounting to as much as $ 300 billion. Ironically, these huge investments by the Taiwanese in China have made them Beijing’s potential hostages. Naturally, Taiwanese policy makers want to diversify their economic interests. Besides, Taiwan is aware that technological and innovative edge is key to long-term sustained growth in an age of global economic interdependence. It risks losing its edge as its businessmen deepen their ties with a communist China that is weak in innovation and strong on cheap labour. So, Taiwanese businessmen want to establish strategic R&D alliances with global innovation centers.
And here, the prospect of collaboration between Taiwan’s computer hardware industry and India’s world-class software industry is said to be extremely promising. In fact, India’s Nascom and Taiwanese counterpart, named III, have been planning to collaborate in producing cheap computers in Tamil Nadu, which, incidentally, has emerged as the focal point of the Taiwanese business in the last few years, with many Taiwanese companies establishing their offices in the southern coastal state of India.
Of late, Taiwanese exports to India have been growing. For the first five months of May 2015, they stood at over $2 billion. The annual trade between the two countries is about $8 billion. This figure as well as the Taiwanese investments in India are expected to expand significantly upon the conclusion of an FTA between the two governments. In fact, Taiwan can be an important partner in strengthening the ‘Make in India’ programme. Taiwanese Foxconn has decided to manufacture Xiaomi mobile phones in Andhra Pradesh, and is also going to invest $5 billion over a period of three years in a manufacturing unit in Maharashtra. With a focus on make in India, the demand for Taiwan’s machine tools is also likely to increase.
India and Taiwan complement each other in terms of demographics. The latter has been experiencing below replacement rate fertility levels of around 1.6 (and declining) for many years. The average life expectancy is 77 years and is 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 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.
Against this background, 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 of many activities. These may range from routine Business Process Outsourcing (BPO) types to those involving such KPO 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 with win-win opportunities. It is said in this context how a portion of Taiwan’s pension assets, which are estimated to be $150 billion, can be invested in India to obtain high returns. These in turn can assist in achieving financial security for the aged in Taiwan.
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 US, South Korea and Japan, to name a few. Even if one treats the interactions between Taiwan and the US 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 the 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?
In sum, despite being the world’s largest democracy, India has neglected Taiwan, the first Chinese society to reject authoritarianism in favour of democracy. India under the BJP is so sensitive to China’s reaction that it has always compromised both principles and pragmatism in its relations with Taiwan. It does not realise that developing a healthy relationship with Taiwan will not only further India’s strategic and economic interests but also checkmate China’s expansionist designs in the region.
