Publication: China Brief Volume: 3 Issue: 3

By Prakash Nanda

Despite being the world’s largest democracy, India has always neglected Taiwan, the first Chinese society to reject authoritarianism in favor of democracy. India is so sensitive to China’s reaction that it has compromised both principles and pragmatism in its relations with Taiwan. It does not realize that developing a healthy relationship with Taiwan will not only further its own strategic and economic interests but also checkmate China’s expansionist designs in the region.

Preserving Taiwan’s freedom, furthermore, is essential if democracy is to evolve in China and elsewhere in the Asia-Pacific, if peace is to be maintained in the region. India is seeking to build a stronger presence there with its “Look-East” policy. But if communist China succeeds in its plan to take over democratic Taiwan, it will feel emboldened to flex its military muscles in the region, particularly against the Southeast Asian nations with which it has territorial disputes in the South China Sea, and India, with which it has a longstanding border dispute.


China has always sought to marginalize India as a “South Asian power” and block its ambition of playing a major role in the Asia-Pacific, not to speak of the world at large. By fanning the India-Pakistan conflict, it has contained India within the subcontinent. By transferring nuclear weapons, missiles and other equipment to Islamabad, it has skillfully transformed the India-China nuclear debate into an India-Pakistan contest. Additionally, Indian intelligence agencies say that while Beijing overtly supports Nepal’s monarchy, it covertly (with the help of the intelligence services of Pakistan and North Korea) funds Nepal’s Maoist rebellion, which is inimical to Indian interests. They also say that Beijing intends to create a new surrogate in Bangladesh, and just last month signed a defense pact with Bangladesh without making the contents public.

And yet New Delhi continues to be extremely sensitive about what it might do or say that might offend Beijing. In a sense, it is repeating the policy mistakes it has made regarding Tibet. It has barely raised its voice against Chinese suppression in that region despite the fact that it is affected by whatever happens there, be it increasing militarization (nuclearization in particular), an exodus of Tibetans to India or environmental degradation. Let it be not forgotten that had Tibet been under Chinese “suzerainty” (the case throughout history) and not under its sovereignty (the case in the 1950s), the Sino-Indian border dispute would have been resolved a long ago and there would have been no war with China in 1962. After all, it is Tibet, not China, that borders India. His Holiness the Dalai Lama, Tibet’s supreme leader now in exile in India, recognizes the McMahon line–the de facto boundary, running from eastern Bhutan to the Brahmaputra River, established in 1914 by British, Indian, Chinese and Tibetan officials–as the border between India and Tibet. New Delhi does as well. Beijing does not.

Having surrendered its Tibetan interests to China, India seems determined to do the same vis-à-vis Taiwan. For example, when Taiwan’s vice president, Annette Lu, wanted to visit the earthquake-affected people of Gujarat Province in 2001 with relief material worth more than US$1 million, New Delhi did not permit her to do so, apparently fearing Beijing’s ire. In fact, what must have been more insulting to Lu were the conditions that India attached when Dr. Parris S. Chang, then chairman of the Committee of Foreign Relations of Taiwan’s Legislative Yuan, came to India with relief assistance on her behalf. Dr. Chang was told not to bring any Taiwanese journalists. He was also asked to keep a low profile and to not speak with either Indian media or Indian ministers.

New Delhi places tremendous restrictions on the official-level exchanges with Taipei. In the absence of formal diplomatic relations, India and Taiwan coordinate their relations through their respective Economic and Cultural Centers. But nothing much has come of this approach. Economic relations between the two are in sorry shape. Bilateral trade in 2002 was US$1.123 billion. Taiwanese investment in India stands at US$114.6 million, and Indian investment in Taiwan at US$4.7 million.


There are three compelling reasons why New Delhi-Taipei relations should be improved. First, given the importance of China in Indian foreign policy, Indian policymakers and foreign policy analysts can benefit from Taiwan’s expertise on China, especially given that India has none of her own and Taiwanese scholars are considered among the best China-watchers in the world.

Second, regular information exchange between the intelligence agencies and militaries of India and Taiwan on issues such as terrorism, cyber-hacking, navigation security and sea-piracy would benefit both sides. Similar exchanges take place between appropriate Taiwanese agencies and their counterparts in the United States, South Korea and Japan. Even if one treats the wide-ranging relations between Taiwan and the United States as unique and quite complex, that Tokyo and Seoul share strategic information with Taipei is decidedly interesting. Both Tokyo and Seoul have far more at stake than New Delhi in maintaining friendly relations with Beijing, considering their greater trade with and investments in China, and their geopolitical concerns. 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. If Japan and South Korea can do it, why not India?

Third, there is tremendous opportunity for economic and technological cooperation. This is now progressing slowly because of New Delhi’s tardiness in concluding bilateral agreements on protecting investment and avoiding double-taxation. India could attract Taiwan to its software industry, particularly when Indian software giants are looking for alternate markets for collaborations following the recession in America’s Silicon Valley. This is all the more so now that many Taiwanese are having second thoughts about their growing investments in China. With unemployment hitting 4.92 percent in 2001 in Taiwan, the highest in the country’s history, and its stock market losing 50 percent of its value, President Chen Shui-bian has been forced to loosen the restriction of the US$50-million cap on individual Taiwanese investments in China, and to lift the ban on the country’s high-tech manufacturers from building semi-conductor plants on the mainland. Chen has also allowed mainland capital to enter Taiwan’s troubled property and stock markets.

However, in the process, more than 300,000 Taiwanese doing business in communist China have become Beijing’s potential hostages. There is now the clear possibility that China could absorb Taiwan economically. There is also the matter of Taiwan’s present technological and innovative edge. This is key to longterm sustained growth in an age of global economic interdependence. Taiwan risks losing its edge as its businessmen deepen their ties with a communist China that is weak in innovation and strong on cheap labor. The solution lies in establishing 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 could be extremely promising.

When viewed from multiple perspectives, India should have an active relationship with Taiwan to promote its national interests. It is time India stopped seeing Taiwan through the prism of China.

Prakash Nanda is a National Fellow with the Indian Council of Historical Research.

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