India and Taiwan are holding bilateral talks over the possibility of bringing chip manufacturing to South Asia along with tariff reductions, the Mint reported.
Officials from Delhi and Taipei met in recent weeks to discuss a deal worth $7.5 billion that would see the installation of a chip plant in India
If an agreement is reached between both countries, tariffs on components for producing semiconductors would be reduced significantly by the end of the year. This move will anger China, which considers Taiwan as a part of its sovereign nation. Currently, Taiwan produces 23.75% of the world’s chips.
India is currently studying possible locations with adequate land, water and manpower, while saying it would provide financial support of 50% of capital expenditure from 2023 as well as tax breaks and other incentives, the Mint said quoting its sources.
The trade talks come at a significant time as the United States is moving to strengthen democracies around the world, especially in the Indo-Pacific zone where China is flexing its dominance on countries like Taiwan and Hong Kong.
Due to the military escalation between India and China in Eastern Ladakh, the relations between both countries have deteriorated. While Taiwan had been trying to strike a deal with New Delhi for a long, India has been careful to not disturb China.
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The Galwan Valley standoff started in May 2020 when the Chinese PLA reportedly started congregating around the LAC in eastern Ladakh. As the heat on the ground between two sides increased and official talks yielded nothing, on 15 June, at patrolling point 14, Indian and Chinese troops clashed for six hours in a steep section of a mountainous region in the Galwan Valley. The fighting resulted in the deaths of 20 Indian soldiers and 5 Chinese soldiers.
