Anchoring an FTA with India: a better option for the Taiwanese semiconductor industry

Taiwan’s labor shortage and the search for a manufacturing partner to relocate Taiwanese companies based in China and India, with its abundant talent pool and huge market size, seems like the ideal partner l for each other and hence it is expected that inking an FTA (Free Trade Agreement) would be a laudable step to remove all avoidable barriers to trade and investment and would lead to a paradigm shift in the tariff regime. Taiwan’s new southbound policy and India’s “Act East” initiative functions as the guiding star to encourage and deepen engagement between the two countries.

With a high need for steady supply of chips, India is encouraging more Taiwanese semiconductor companies to choose India as a manufacturing partner. India’s proactive inward investment strategy has given great attention to Taiwan. India is committed to creating a manufacturing hub by encouraging more inward investment. And the Production Linked Incentive Scheme (PLI) is a lucrative offer to make this idea a reality. Through this scheme, the Indian government offers incentives linked to manufacturing performance. The Indian government has identified 14 sectors, such as automotive, electronics, aviation, textiles, and many more for these performance awards.

In 2021, two Taiwanese companies, Foxconn and Wistron, have been chosen for the PLI program and it is expected that many more Taiwanese companies will have this eligibility to receive PLI benefits. With an increasing number of such investments and business collaborations, India and Taiwan plan to secure this ecosystem by signing an FTA. In fact, the FTA will ensure a certain degree of liberalization of commercial and manufacturing operations by eliminating the maximum possible tariffs, trade barriers, quotas and subsidies from both jurisdictions. The main objective of the FTA is to create more value-added platforms for long-term investment opportunities by ensuring international standards.

Both countries need to remember a fact that the FTA will only be able to stimulate minimum levels of protection in some sensitive countries and therefore they need to investigate their national inequalities and establish a basic safeguard framework for businesses. For example, intellectual property acts as a shield for a company during technology transfer and regional marketing, but such intellectual property could be problematic for both countries due to the national inequalities of India and Taiwan.

India’s compulsory licensing and Taiwan’s patent coupling system are highly contested intellectual property mechanisms. Taiwan’s intellectual property law prevents generic drug marketing approvals until patents expire, while India’s patent law allows a third party to produce a patented product during the life of a patent. a patent through a compulsory license. Therefore, companies may need the vigilance of both governments during the drafting of the FTA. To ensure the most achievable outcome of this FTA, a thorough discussion with the company’s general counsel and legal and intellectual property attorneys from both jurisdictions should be crucial before the whole process is launched. (ANI)

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)

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