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Taiwan firms investing big in Tamil Nadu, creating tens of thousands of factory jobs. What’s driving it

Taiwanese companies are making a beeline for Tamil Nadu, while the state is also reaching out to East Asian nation, especially in sectors such as electronics and non-leather footwear.

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Chennai: On 18 August, Tamil Nadu Chief Minister M.K. Stalin inaugurated a Rs 706-crore residential complex for Foxconn’s female workers at Sriperumbudur, 40 km from capital Chennai, that offers dormitory-style rooms designed to house up to 18,720 workers.

But the show-stealer that time was a video of state industries minister T.R.B. Rajaa himself driving Foxconn chairman Young Liu from the Chennai international airport to Sriperumbudur, showing the state’s bonhomie with the world’s largest electronics manufacturer which claims to have its second-largest workforce after China in Tamil Nadu, with 60,000 employees.

It’s not just Taiwan-based Foxconn that the southern state shares deep ties with.

According to data from the Taipei Economic and Cultural Center (TECC) in Chennai, there are 270 Taiwanese firms in India of which most are located in Tamil Nadu. Lotus, a subsidiary of Taiwanese footwear company Feng Tay, has employed 40,000 workers in its manufacturing unit in Tamil Nadu, followed by Taiwan-based electronics manufacturers Pegatron (20,000 workers) and Delta (20,000 workers)—making the East Asian country one of Tamil Nadu’s major investment sources.

Major Taiwanese shoe companies such as Shoe Town, Feng Tay and Pou Chen are also setting up factories in Tamil Nadu. The world’s largest manufacturer of branded athletic and casual footwear, Pou Chen, clinched a deal with the state just last year to set up a unit for Rs 2,302 crore.

Home to 40 Special Economic Zones (SEZ), the southern Indian state has attracted investment from over 20 major Taiwanese companies, wrote Naina Singh, a PhD scholar with the thinktank Taiwan NextGen Foundation, in a 2022 research paper titled ‘India-Taiwan Relations: Making a Case for Active Sub-National Diplomacy with Tamil Nadu’.

“We reach out to Taiwan, simply because there are sectors where Taiwan is very good globally. Two specific sectors are electronics and non-leather footwear,” V. Vishnu, IAS, MD & CEO of Guidance, Tamil Nadu’s investment promotion agency, told ThePrint.

Vishnu added that though the state doesn’t provide any special incentives to Taiwanese companies, it continuously follows up with them for potential investment, while Taiwan believes Tamil Nadu has the best ease of doing business environment in the country.

The sentiment was echoed by the TECC.

Richard C.L. Chen, director-general of TECC, told ThePrint that Tamil Nadu shares a cordial relationship with Taiwan, while the state’s location and infrastructure, compared to northern Indian states, are added benefits.

Taiwan is the leading force in electronics manufacturing, especially in the semi-conductor industry. According to a report by the US International Trade Commission, around 92 per cent of the world’s most advanced chip manufacturing capacity is located in Taiwan.


Also Read: A Tamil Nadu village is rooting for Kamala Harris & how India’s pulling off space projects on a budget


‘India a crucial partner for Taiwan’

Tamil Nadu, the second largest contributor to India’s GDP followed by Maharashtra, has the strongest manufacturing ecosystem in the nation, with over 39,000 factories. US, Singapore and Japan are the major global partners of the state.

The state further accounts for India’s highest female workforce in factories and has robust connectivity with six airports and four major and 19 minor seaports.

According to data from Guidance, the state accounts for 20 percent of India’s electronics production, 33 percent of India’s electronics exports, and 39 percent of India’s footwear exports.

The state’s relationship with Taiwan is boosted by the presence of three representations from the East Asian nation, the TECC which works as a de facto consulate, the Taiwan External Trade Development Council and the Taiwan Chamber of Commerce.

According to Chen, the presence of TECC plays a major role in boosting Taiwan’s ties with Tamil Nadu as it facilitates communications between the companies and the state government.

He said that Taiwan opened its third TECC in Mumbai last month, hoping to expand its footprint in western India. The first TECC was opened in Delhi in 1995 and the Chennai facility was opened in 2012.

Chen told ThePrint that his nation was looking to increase trade ties with India as part of its New Southbound Policy and to reduce ties with China amid rising tensions with the latter.

“We would like to work with democratic countries, who value our freedom and human rights. And one of the reasons is that we face the same enemy. We think we cannot only share our experience in commerce and business but also share our experience in dealing with China,” he said.

However, he added that Taiwan was finding it difficult to strengthen business ties with India as the latter was taking a cautious approach and there was difficulty in doing business.

While the Indian government hesitates to send its delegates to Taiwan, southern states are an exception, and this is the reason behind Taiwan’s increased ties with these states. Of the total Taiwanese majors invested in India, 60 per cent are in south India, Chen said.

“India is a big market and has a big pool of labour. It’s a crucial partner for Taiwan. And we are willing to engage with the nation,” Chen asserted.

(Edited by Nida Fatima Siddiqui)


Also Read: What reports on Indian women’s falling participation in labour force don’t tell you


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