New Delhi, Mar 20 (PTI) Taiwan can help India reduce its import of electronic components from China and the best way to bolster the economic engagement including in the semiconductor sector would be to seal a free trade pact, Taiwanese deputy national security adviser Hsu Szu-Chien said on Thursday.

In an exclusive interview to PTI, Hsu said a trade deal will pave the way for greater investment in India by Taiwanese companies in the high-technology sectors as it will help in bringing down the "high tariffs".

The Taiwanese deputy national security adviser was in the national capital to participate in the Raisina Dialogue, India's flagship conference on geopolitics, and hold talks with senior Indian officials.

Hsu said there can be a match-making between technology of Taiwan and India's demographic dividends to produce high-end technology components in India that will help New Delhi cut its imports from China.

"I think there's great potential for the relations to expand, especially on economic cooperation," Hsu said.

He said India can bring down its "huge" trade deficit with China by going for joint production of various electronics components instead of keep importing them from China.

"Most of these are ICT (information and communication technology) products, which from our perspective, India has great potential to produce. And Taiwan can be of help, not only semiconductor, but all other ICT products," he said.

"India itself is a huge market and you have a demographic dividend of a very young age of population, which can be put into the workforce." Leading Taiwanese companies are increasingly looking at relocating their production bases from China to countries in Europe, North America, the US and India in view of Washington's trade dispute with Beijing and Chinese military's increasing muscle flexing around Taiwan.

"So with the technology of Taiwan, with the demographic dividends, I do see a very bright future for economic cooperation," Hsu said.

India has a ballooning trade deficit with China as its imports from that country in 2023-24 totalled USD 101.75 billion as against exports of USD 16.65 billion, according to available data.

Major imports from China include electronic components, computer hardware, telecom equipment, chemicals and raw materials for pharmaceutical products.

Taiwan, a self-ruled island of more than 23 million people, produces over close to 70 per cent of the world's semiconductors and over 90 per cent of the most advanced chips that are required for almost all electronic equipment such as smartphones, car components, data centres, fighter jets and AI technologies.

Hsu also said that Taiwan is keen on having a trade pact with India. The idea of having a trade pact between the two sides was conceived around 12 years back.

Taiwan has a "very strong intent" to have trade negotiations with India, he said.

"It has to do with the fact that the tariff is really high. It's really not very good, especially for the medium and small-sized Taiwanese companies, high-tech companies, to come over to invest," he said.

"So to have a trade deal will be, from our perspective, mutually beneficial," he said, adding "I hope, given the bright future I just described, I hope there will be renewed momentum from both sides to go ahead." The two sides have already conducted studies for the proposed FTA and held preliminary discussions for the pact.

India is Taiwan's 17th largest trading partner and under the "Make in India" policy, the total investment of Taiwanese enterprises in India has exceeded USD 4 billion covering areas from footwear, machinery, automobile components to petrochemical and ICT products, according to official data.

The India-Taiwan relations have witnessed some upswing in the last few years.

Last year, the two sides inked a migration and mobility agreement that will facilitate employment of Indian workers in diverse sectors in the self-ruled island. Both sides were engaged in discussions over the pact for several years.

China considers Taiwan as its breakaway province and insists it should be unified with the mainland, by force if necessary. Taiwan, however, sees itself as completely distinct from China.

Though India and Taiwan do not have formal diplomatic ties, the bilateral trade relations have been on an upswing.

In 1995, New Delhi set up the India-Taipei Association (ITA) in Taipei to promote interactions between the two sides and to facilitate business, tourism and cultural exchanges.

India-Taipei Association has also been authorised to provide all consular and passport services.

In the same year, Taiwan too established the Taipei Economic and Cultural Centre in Delhi. PTI MPB ZMN