By Mahua Venkatesh

New Delhi, Feb 15: At a time when global shortage of semi conductors has hit production of electronic items including smartphones and vehicles, the newly inked joint venture between the Anil Agarwal-led Vedanta and Hon Hai Technology Group – better known as Foxconn Technology Group -- to manufacture semiconductors in India naturally had grabbed headlines.

While this is expected to give a push to Prime Minister Narendra Modi's production-linked incentive (PLI) plan, it is also seen by many as a move that would further expand collaboration between India and Taiwan, which is a key player in the global supply chain network.

The joint venture also gives shape to Taiwanese President Tsai Ing-wen's "New Southbound Policy" and Modi's Act East Policy.

"India is quietly but aggressively deepening its economic ties with Taiwan, there could be many more such investment announcements in the offing," an insider told India Narrative.

Also read: Taiwan electronics giant Foxconn forms JV to make chips in India

Though New Delhi and Taipei have no diplomatic ties at present, India is one the 18 countries under its New Southbound Policy" that Taiwan is looking to expand its ties with.

"The investment would be considered a win for Indian Prime Minister Narendra Modi's government, which aims to create an ecosystem for semiconductor manufacturing in India," Taipei Times said in a report.

Last year, the Centre gave its nod for a Rs 76,000 crore PLI scheme aimed at developing the semiconductor and display manufacturing ecosystem.

India has been solely relying on imports of this critical component that forms a key raw material for almost all electronic items.

Senior government officials of both countries pointed out the need to expand bilateral relations "based on mutual interests."

"Taiwan is a developed economy and a powerhouse of technology and we must establish good relations with the country," the late Shakti Sinha, a former bureaucrat and director at Atal Bihari Vajpayee Institute of Policy Research and International had told India Narrative in an interview.

Invest India, meanwhile, in its assessment said that India's semiconductor demand at present, is valued around $ 24 billion but by 2025, the market is expected to touch $ 100 billion.

Demand for semi-conductor has increased significantly with the rise in usage of mobile phones and computers. The advent of 5G technology will push demand further.

Invest India, the nodal body facilitating investments in the country, noted that the shortage of semi conductor amid the Covid 19 pandemic and the new geopolitical realities further exacerbate the need to develop trusted and reliable sources for chip manufacturing.

It has also set up a new mechanism under the umbrella ‘Taiwan Plus' to help and handhold Taiwanese companies set up shop here.

Besides Foxconn, several other Taiwanese contract manufacturers including Wistron Corp and Pegatron Corp have also set up their manufacturing facilities in India. According to a Reuters report, these companies have drawn up plans to plough in $900 million in India over the next five years to tap into the government's production-linked incentive plan.