The Taiwan strait crisis is escalating tension between China and Taiwan.
The fight is about national identity, sovereignty and differing political ideologies. The tension between China and Taiwan can potentially have significant implications for India both in terms of geopolitical and economic security.
1 strategic balance in Asia Pacific: if China establishes control over Taiwan, it might embolden Beijing to assert itself more aggressively in territorial disputes such as south China sea and Sino- Indian border disputes.
2 impacts on Sino Indian Relations: such a crisis could strain India’s already complex relations with China.
India’s stance on Taiwan is typically viewed as a barometer of its relations with Beijing.
3.US – India relations: Taiwan strait crisis could potentially draw India closer to or put India under US pressure to choose sides thereby influencing India’s foreign policy dynamics.
- strengthening defence: India has to strengthen particularly its naval presence in Indian ocean.
- diversification of supply chain: India has to reduce reliance on single source for critical components like semiconductor.
- Multilateral cooperation: India has to explore multi cooperation avenues with other Pacific democracies like Japan, South Korea and Australia.
Therefore, the focus should be on multilateral diplomacy and economic resilience to mitigate the potential impact of such crisis.
Trade and commerce disruptions:
A crisis in Taiwan strait can severely disrupts Eat Asian supply chain.
Taiwan is a major player in the global supply chain particularly in semiconductor industry where it accounts for 63% of the world’s semiconductor production as of 2021.
This means that a significant proportion of the world electronics rely on components manufactured in Taiwan. As per data from 2020 India imported around $2.3 billion worth of electronics components including semiconductor, indicating heavy reliance of India’s IT sector on Taiwan.
A crisis in Taiwan strait can therefore cause sever disruptions in India’s IT industry.
Impact on investment:
Between April 2000 to June 2020 India received around $ 360 million FDI from Taiwan. A crisis in the Taiwan strait may discourage Taiwanese firms from further investment in India, thus hampering the growth process in India.
India should maintain strategic autonomy, balancing its relationship with major powers and ensuring it does not get drawn into unwanted regional regional conflict.