Mon, Jun 23, 2014 page13

• Taiwan-India links set to surge: report

  POLITICAL PROFITS: Yuanta Investment Consulting predicted that the South Asian giant would court foreign direct investment under new Indian PM Narendra Modi

  • By Kevin Chen / Staff reporter
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  There is a huge potential for further economic cooperation between Taiwan and India, after its new government led by Indian Prime Minister Narendra Modi announced its intentions to attract foreign investment to revamp the nation’s slumping economy, Yuanta Investment Consulting Co (元大投顧) said last week.

  In addition, an economic cooperation agreement (ECA) similar to a free-trade agreement with India, which is intended to lower or remove bilateral tariffs and other trade barriers, would be a strong incentive for Taiwanese exporters and investors to tap into the South Asian country’s market, Yuanta said in a research report issued on Friday.

  The report came after the Bureau of Foreign Trade said earlier in the week that Taiwan is to send an economic and trade delegation to India in September to encourage two-way investment, and Taipei is to host a Taiwan-India investment forum in October.

  In a statement posted on its Web site on Thursday, the bureau said it signed a renewed memorandum of understanding with Standard Chartered PLC on June 11, as Taiwan plans to continue relying on the UK lender’s regional resources to help foster its bilateral trade with India.

  India ranks 20th among Taiwan’s trading partners, the bureau said.

  Modi’s Bharatiya Janata Party won a historic election victory last month largely because of his promise to boost economic growth in India, with a plan to shape the nation into a global manufacturing hub.

  As a result, Modi and his government are expected to speed up the review process for major commercial projects, encourage private investment in the coal and defense sectors, establish industrial zones and provide incentives to accelerate the development of labor-intensive manufacturing in Asia’s third-largest economy, Yuanta researcher Wendy Kuo (郭香妏) said.

  However, the implementation of policies will be the key to investment and consumption growth, she said.

  Bilateral trade between Taiwan and India totaled US$6.17 billion last year, growing by more than 400 percent from US$1.2 billion in 2000 and represented an increase of 556 percent from US$940 million in 1995, when the two countries first set up representative offices to deal with trade and cultural exchanges, the bureau’s statistics showed.

  However, the nation’s foreign direct investment (FDI) in India remains relatively minor, ranking the 41st-largest as of the first quarter of last year, according to tallies compiled by the Department of Commerce in India.

  Between 2000 and March last year, Taiwan invested US$65.7 million in India, accounting for 0.03 percent of India’s total foreign investment during the period, statistics showed.

  Since Taiwan has been seeking trade ties in South Asia in recent years, India is likely to be a close economic and investment partner, Kuo said.

  “India and Taiwan have agreed to form a task force to facilitate the Taiwan-India economic cooperation agreement,” she said, adding that the upcoming investment forum in October would mark the first step toward signing the ECA.

  Kuo said the industries that Taiwanese companies have invested in India have been similar to those invested in within China.

  “As the China market is stabilizing or even facing saturation, we believe Taiwanese companies will expand globally, with India a starting point given its huge market and low labor costs,” she said.

  Taiwanese investment in India is mainly focused on information and communications technology, machinery, transportation, engineering, metal manufacturing and shoemaking, as well as the agriculture and fishery sectors.

  Based on Yuanta’s research, the manufacturing segment currently accounts for just 15 percent of India’s GDP, lower than China’s 30 percent, because of the country’s lagging infrastructure development, slow-moving bureaucratic system and high interest rates that hinder business investment.

  India’s economy grew 4.6 percent in the first quarter of the year from a year earlier.

  Yuanta forecast India’s GDP would grow by about 5.5 percent this year and 6.5 percent next year.
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