Jai Siya Ram

Taiwan is aggressively seeking a larger presence in India’s technology and manufacturing sectors, primarily driven by two major factors: rising U.S. demand for electronics made outside of China and India’s strategic push to become a global manufacturing hub.

This move is part of a broader shift in global supply chains, often referred to as “China Plus One,” where companies diversify their manufacturing base.

Here are the full details on Taiwan’s strategy and the key areas of growth:

1. The US Demand and Supply Chain Diversification

The primary catalyst for Taiwan’s increased focus on India is the global demand shift, particularly from the United States.

• Tariff Evasion and De-risking: The U.S. has imposed elevated tariffs on goods imported from China. By shifting final assembly and manufacturing to India, Taiwanese companies can supply the lucrative U.S. market while avoiding these tariffs and reducing their exposure to geopolitical risks associated with manufacturing in China.
• The Apple Effect: The clearest example is the surging demand for Apple’s iPhones in the U.S. Taiwanese contract manufacturers like Foxconn, Wistron, and Pegatron (major Apple suppliers) have significantly expanded their operations in India to meet this demand. India’s smartphone exports to the U.S. have jumped, driven mainly by the production of iPhones.
• Ambitious Export Goal: The Chairman of the Taiwan External Trade Development Council (TAITRA) recently stated that Taiwan aims to double its exports of chips and electronics to India within the next five to seven years, reflecting the huge potential seen in the partnership.

2. Focus on Semiconductors and Advanced Manufacturing

Taiwan, a global powerhouse in semiconductor manufacturing, is making its most significant investments in India’s chip and high-tech ecosystem.

• Major Investment Projects:
  • Tata-Powerchip Semiconductor (PSMC): This is a landmark partnership to build India’s first advanced wafer fabrication plant in Dholera, Gujarat, with an investment of over ₹91,000 crore (approx. $11 billion). This collaboration is critical for giving India a foothold in advanced chip manufacturing, often seen as the “brain” of modern electronics.
  • Foxconn’s OSAT Facility: Foxconn is setting up an Outsourced Semiconductor Assembly and Testing (OSAT) facility in Jewar, Uttar Pradesh. OSAT is a crucial step in the chip supply chain, which involves packaging and testing the fabricated chips before they are used in devices.
• Electronics Ecosystem: Beyond chips, companies are investing in the broader electronics ecosystem. Foxconn has also unveiled a $1.5 billion investment in its India unit to shift more production out of China and reinforce India as a key global manufacturing hub.
• Advanced Manufacturing: Taiwanese companies specializing in Smart Manufacturing, such as machine tool manufacturers and robotics companies (like Syntec, HIWIN, and Techman Robot), are also seeking joint ventures to supply India’s growing industrial sector.

3. Complementary Strengths and Government Initiatives

The growing synergy is driven by how India’s strengths complement Taiwan’s technological edge.

Export to Sheets

• Talent Exchange: Taiwanese firms like MediaTek (the world’s third-largest integrated circuit design house) already have large R&D operations in India, leveraging the country’s software and IC design talent.
• Trade Goals: Bilateral trade between India and Taiwan has already more than doubled in the last five years, crossing $10 billion, with India’s imports of integrated circuits, micro assemblies, and machinery driving the growth.
• FTA Interest: Taiwanese companies are actively pushing for a Free Trade Agreement (FTA) between the two countries, which they believe would significantly accelerate business and semiconductor cooperation.