After approving incentives for Taiwanese firms, the government is now likely to have formal talks on a trade deal with the Tsai Ing-wen administration.

The move will be significant since India, like most countries, does not formally recognise Taiwan because of Beijing's 'One China Principle' under which the democratic island is its "integral" part.

However, in the last six months, China's aggression against India along the Line of Actual Control in Ladakh has pushed New Delhi to review its foreign policy in the region and its approach towards the Chinese Communist Party (CCP) regime.

The CCP has been threatening to invade Taiwan but President Tsai Ing-wen recently warned it against any such move. Incidentally, on Taiwan's National Day celebrations early this month, Tsai had announced that Taipei will play an active role in establishing a new regional and international order in the face of the Chinese aggression against democracies.

Tsai's statement had come days after the foreign ministry level meeting of the Quad  Japan, Australia, US and India  in Tokyo where US Secretary of State Mike Pompeo lashed out at China's military moves against India, Taiwan and in South China Sea. The Quad has also been discussing global over dependence on China's supply chains for manufactured products.

Earlier this month, the Modi government approved $6.65 billion incentives for 16 firms including Taiwan's three major partners of Apple -- Foxconn Technology Group, Wistron Corp and Pegatron Corp -- to boost domestic smartphone production over the next five years. Incidentally, Apple launched its online store in India last month.

Though in the last three years, Wistron and Foxconn began assembling a few iPhone models in India, but sources said the incentives to them will now change the whole dynamic. Overall, the 16 firms will create more than 200,000 direct employment opportunities for Indians. Around 60 per cent of the products manufactured in India will be exported.

Sources said that incentives to the three Taiwanese firms have led the government to consider holding formal talks about a trade deal with the Taiwanese government. India and Taiwan, sources said are keen on strengthening their trade in technology and electronics.

India and Taiwan have already signed a bilateral investment agreement in 2018. But a formal trade deal amidst tensions with China can lead to further breakdown of the New Delhi-Beijing relationship and may also result in complications at the World Trade Organization. However, sources said, a lot will depend on the US backing to Taiwan.
(IANS)