Taiwan wants FTA with India, will reduce tariffs on Indian farms products, says Taiwanese economist

Kristy Hsu

A free trade agreement (FTA) between Taiwan and India would be mutually beneficial, which would not only boost ties but also create economic opportunities for both sides, Kristy Hsu, who is director of the Taiwan-ASEAN Studies Center at Chung-Hua Institution for Economic Research, has said.

India will play a bigger role in global trade, especially in labour-intensive sectors, as it builds its supply chains, she said, adding that Taiwanese companies and their customers want to delink from China.

"Taiwan did an FTA feasibility study with India 10 years back. It wants an FTA with India. If India wants to export agriculture products to Taiwan, we will reduce our tariffs through FTA," Hsu, who also advises the Taiwan Chamber of Commerce in India (TCCI), said in an interview to Moneycontrol.

If India were to reduce tariffs on imports of components needed by Taiwanese companies manufacturing in India, it would give a fillip to trade, she said. To attract more Taiwanese investment, India should ease labour laws and streamline work visas, she said.

Taiwanese companies have stepped up investment in India, particularly in sectors such as electronics manufacturing, semiconductors and electric vehicles (EVs).

Major Taiwanese companies such as Foxconn, Wistron, and Pegatron largely import electronic integrated circuits, semiconductors, EV components, and machinery from Taiwan.

Trade winds

In FY25, bilateral trade between India and Taiwan stood at $11.8 billion, 17 percent higher than the previous year.

Over the past decade, Taiwanese companies’ interest in investing in India has surged, she said. In 2015, TCCI had around 80 member companies, which has grown close to 200 now.

"In terms of trade, India will play a better role in the future. India is building its own supply chains…" Hsu said, adding that this has resulted in FDI from Taiwan reaching historic highs in the past four to five years.

According to India’s commerce and industry ministry, FDI from Taiwan surpassed $665 million between 2018 and 2024.

"Many labour-intensive sectors are moving to India. Taiwanese companies and their western customers want to delink from China. So new supply chains have to be built," Hsu said.

Vietnam has a labour and electricity shortage. “Thus, Taiwanese companies want to relocate some supply chain to India. Foxconn is the biggest example. It’s assembling most of the iPhones in India,” she said. “Foxconn China is producing iPhones for the Chinese market, but for the US and other markets, iPhones being manufactured in India are being exported.".

India needs to further relax its regulatory framework to become investor-friendly. "Taiwanese companies have been facing a lot of work visa issues. It takes a lot of time for visas to be issued. Also, the labour laws are rigid," she said.

Vietnam attracted a lot of Taiwanese investment because it was flexible with regulations. India should do that too, she said.

India should send delegates to Taiwan to talk to businesses to make them aware of Indian laws, regulations and other challenges.

How has the India-Taiwan trade relationship shaped in recent years?

The bilateral trade between India and Taiwan stood at $11.8 billion in FY25. Taiwan exports mainly integrated circuits, machinery and mechanical appliances, electrical machinery, plastics and plastic products, iron and steel, and medical instruments; while India exports refined petroleum, raw aluminium, ferroalloys, marine products, cotton raw and waste, and organic and inorganic chemicals.

Which are the sectors that Taiwanese firms have invested in?

According to the commerce ministry’s data, foreign direct investment (FDI) from Taiwan surpassed $665 million between 2018 and 2024.

Taiwanese electronics contract manufacturers, including Foxconn, Wistron, and Pegatron, have made substantial investments in India to set up or expand their manufacturing facilities, mainly for assembling mobile phones, particularly iPhones, under the PLI scheme for large-scale electronics manufacturing.