Key Takeaways

• India’s Act East Policy, coupled with Taiwan’s expertise, ignites economic growth in India’s Northeast region. This collaboration attracts vital investments and strengthens global supply chains. 
• India’s regional ambitions and Taiwan’s New Southbound Policy perfectly align, fostering a more stable, cooperative, and prosperous South and Southeast Asia. 
• Collaboration in IT and manufacturing bolsters regional stability, aligning perfectly with both countries’ strategic objectives in the face of heightened geopolitical tensions. 
• Integrating Taiwan within India’s policy framework not only strengthens regional security but also logically fosters development across the Indo-Pacific.

Collaboration between Taiwan and India in various sectors, facilitated by India’s Production-Linked Incentive (PLI) scheme under the initiative of the Act East Policy, holds the potential to enhance the global supply chain. This collaboration not only boosts economic growth but also positions the Northeast Region (NER) as an attractive destination for investment and development. The region’s untapped potential is further emphasised, with joint efforts aimed at harnessing it, boosting infrastructure, and stimulating job creation. Such initiatives drive overall prosperity, aligning with both India’s and Taiwan’s strategic goals. The Union Budget 2024-25’s emphasis on research and innovation, particularly in the manufacturing sector, complements this collaboration, providing further impetus to the growth trajectory of various industries and fostering economic resilience.

India’s proactive endeavours to bolster its influence in South and Southeast Asia, particularly evident in its response to China’s actions like issuing stapled visas for Arunachal Pradesh residents, align seamlessly with Taiwan’s ‘New Southbound Policy’. This unified approach not only solidifies ties between India and Southeast Asian nations but also fosters regional stability and cooperation. Taiwan’s recent electoral triumph, led by the Democratic Progressive Party (DPP), reaffirms its dedication to democratic principles, further reinforcing the bond between the two nations. This strengthened alliance enhances India’s stance against China’s actions while advancing collaborative efforts with Taiwan to develop the Northeast Region (NER), thus bolstering regional resilience and strategic positioning.

In light of favourable conditions, the Northeast region of India presents a prime opportunity for Taiwan`s investment. Its alignment with Taiwan`s strengths in technology and manufacturing, coupled with its strategic location and recent investment promotion efforts, makes it an attractive destination. The Northeast Trade and Investment Roadshow in Kolkata, organised recently by the Ministry of Development of North Eastern Region (MDoNER), featured presentations, roundtable discussions, and seminars, attracting over 600 prominent companies. With participation from senior officials and global ambassadors, the event showcased the region’s potential across sectors. This proactive engagement highlights the NER`s appeal for investment and collaboration.

Taiwanese investments in India, particularly in key sectors such as electronics, ICT, and petrochemicals, have been substantial, totaling $4.469 billion. These investments are diversified and have a significant presence in states like Maharashtra, Tamil Nadu, and Karnataka. Initiatives like India’s “Taiwan Plus” programme and growing bilateral trade further solidify the NER’s emergence as a promising hub for future investments, leveraging its untapped potential and strategic location. 

Through strategic collaborations and investments with Taiwan, the NER is poised to become a key player in South and Southeast Asia’s dynamic geopolitical landscape. Sectors like information and electronics, chemicals, and light industries are projected to thrive, driving the region’s economic potential to NT$23.38 trillion. These developments align with Taiwan’s New Southbound Policy and India’s Look East Policy, fostering regional stability and prosperity. 

Collaboration in the NER’s IT and manufacturing sectors presents opportunities for growth through technology transfer and job creation. Taiwan’s educational programme emphasis complements the region’s potential for skill development. However, despite promising opportunities for growth in the Northeast Indian region’s IT and manufacturing sectors through collaboration with Taiwan, several limitations and regulatory hurdles persist. Infrastructure deficiencies, skill gaps, bureaucratic hurdles, and intellectual property concerns pose challenges.

Regarding skill gaps, India’s initiatives, such as “Transforming lives, building futures,” launched in August 2023 by the Ministry of Skill Development and Entrepreneurship, aim to provide skill training to 250,000 youth in the NER, thereby offering a potential workforce to address Taiwan’s shortages.

In agriculture, overcoming issues like land fragmentation, water scarcity, and market access is crucial. Addressing these challenges can unlock the full potential of collaboration, leading to sustainable economic growth and improved livelihoods.

On the other hand, with Japan already laying a solid foundation in India’s NER, the question arises: if Taiwan can further contribute to the NER, it would significantly amplify the gains from the Act East Policy. Recently, Japan has committed a substantial loan of 232.209 billion yen (about Rs 12,800 crore) for nine projects across India, which span across different sectors such as infrastructure, innovation, sustainable horticulture, climate change response, and healthcare. Specific projects include the Northeast Road Network Connectivity, aimed at bolstering regional infrastructure.  These provide fertile grounds for Taiwan’s involvement in the NER.

Despite promising prospects, challenges persist due to China’s apprehensions regarding India’s ties with Taiwan. China’s concerns may prompt consideration of supporting separatist groups in the NER as a response to Taiwan-related issues. However, the feasibility of such actions is constrained by several factors. China faces risks to its international reputation and difficulties in garnering support from other nations, limiting its influence in the region. Consequently, China may opt for diplomatic engagement or employ media narratives to address its concerns.

Taiwan as a prime partner for the Act East Policy is not only strategically sound but also a logical extension of India’s existing approach. Both democracies face similar security threats from China, and a potential crisis in Taiwan could disrupt crucial trade routes, impacting India’s maritime security. The Memorandum of Understanding (MOU) on cybersecurity cooperation signed in 2022 between India and Taiwan serves as a testament to the potential for broader collaboration and as a form of resistance against any potential threats.

Therefore, Northeast India’s development aspirations perfectly align with Taiwan’s technological prowess, boosting “Make in India” initiatives and infrastructure development in the region.  Including Taiwan within the Act East Policy framework not only strengthens regional security but also logically fosters development across the Indo-Pacific.

This article is authored by Nitin Anupam Bage, research intern, Centre for Public Policy Research

Views expressed by the author are personal and need not reflect or represent the views of the Centre for Public Policy Research.

Nitin Anupam Bage

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