Geopolitical tensions between India and China are beginning to hurt some of Taiwan’s largest tech companies, including suppliers to Apple Inc., and hamper New Delhi’s much-lauded electronics manufacturing incentive program.
India has been slow to issue visas to Chinese engineers, which are needed to help Taiwanese companies build factories in the South Asian nation. India is also pushing companies to opt for the harder-to-get work permits, they added, demanding not to be identified to discuss a private matter.
The altercation could delay Prime Minister Narendra Modi’s plan to bolster India’s manufacturing capacity and deter foreign investors who have invested $ 30 billion in the six months to September, with the maximum amount of FDI going into the computer hardware and software sectors. Companies are looking to India to diversify their supply chains. PM Modi has banned hundreds of Chinese apps and slowed approval for Chinese investments after a deadly clash along the controversial border between the two neighbors killed 20 Indians and an unknown number of Chinese soldiers.
In the past year, companies such as iPhone installers – Foxconn Technology Group, Pegatron Corp. and Wistron Corp. – Pledged $ 1.5 billion, along with many others, to build mobile phone systems in India after the Modi government offered them specially designed incentives to manufacture their products locally for global export. The move should also move the supply lines from China to India.
Visas are an important resource for expanding domestic manufacturing. “The government needs to align its existing policies with actual and short-term requirements for technical workers to build new factories,” said Pankaj Mohindroo, chairman of the India Cellular and Electronics Association. “We hope this problem will be resolved soon to everyone’s satisfaction.”
As tensions with China escalated along the Himalayan border last summer, New Delhi stepped up Chinese activities in the country and reviewed visas for Chinese business people, academics, industry experts and stakeholders. The measures are similar to those that have long been used in arch-rivals and neighbors Pakistan.
Aside from the delays in issuing visas, the Government of India has indicated a preference for issuing work visas instead of business visas for people required to set up the production lines imported by companies. Work visas usually require more paperwork and background checks by the Indian Ministry of the Interior and so could be the reason India insists on them. Business visas are also shorter.
Companies have refused work permits because it increases costs. This will also result in double taxation for engineers and technicians as they will continue to be employed by their respective companies in China. Professionals and experts are also needed to train and guide machines that are being installed in the country for the first time, as well as specialists to oversee the whole process.
Developments come at a time when New Delhi is under pressure to stimulate growth in Asia’s third largest economy, which is poised for its worst annual decline since 1952. Millions are losing their jobs and being pushed into poverty due to the pandemic.
The incentive program for cell phone manufacturers alone envisages the production of smartphones worth 10.5 trillion rupees and the export of 6.5 trillion rupees over the next five years. It will likely create over 800,000 jobs.
The New Delhi-based Taipei Economic Culture Center and spokesmen for the Ministry of Industry, the Ministry of Interior and the Ministry of Foreign Affairs did not immediately comment on the matter. The Chinese Foreign Ministry also did not immediately respond to a request for comment. Wistron and Pegatron declined to comment, while Foxconn did not respond to questions asked via email.
India and China have begun withdrawing their troops from part of their controversial border after several rounds of military and diplomatic talks. The withdrawal of troops from other disputed areas along the unmarked border is still pending.