Taiwan has expressed interest in accessing India’s rare earth minerals, needing resources to strengthen its high-tech industries from electric vehicles to renewable energy. India, holding the world’s third-largest reserves of rare-earth elements (approximately 8.52 million tons), presents a significant opportunity. Taipei’s proposal, at the Taiwan Expo 2025 in New Delhi, would see Taiwan provide semiconductors and advanced manufacturing expertise, with India serving as a supplier of rare earths, forming a mutually beneficial partnership.

Brewing ties

Since 2018, the Taiwan Expo in India has acted as a platform for Taiwanese businesses to diversify markets while strengthening ties with Indian companies. Expo events help expand partnerships, navigate tariff challenges, and secure subsidies from Taipei. Collaboration has been established in semiconductors, plus electronics manufacturing, ICT, and smart machinery.

Bilateral trade has followed an upward trend, increasing by nearly 10% annually since 1991, reaching $8.5 billion in 2023. By early 2024, nearly 200 Taiwanese companies had established operations in India, investing approximately $4.5 billion and creating over 170,000 jobs. The success stories of companies like Wistron and Foxconn reflect this trend, and recent moves mark an early step toward diversifying global critical-mineral supply chains beyond Chinese dominance.

Natural match-making

India’s vast rare earth reserves are distributed across several coastal and inland states, including Tamil Nadu, Odisha, Kerala, Andhra Pradesh, and Chhattisgarh. They are used in permanent magnets, wind turbines, electric vehicles, and other parts of the green energy transition. Their qualities of magnetism and luminescence power smartphones, missile guidance systems, medical imaging technologies, high-performance motors, and LED lighting. However, as a resource they are still largely underdeveloped and underexploited in commercial terms. As a result, India’s Ministry of Mines works to strengthen supply chain resilience for these critical minerals.

Earlier this year, a new critical minerals initiative, FORGE, launched in Washington, D.C. to de-risk supply chains and reduce global overreliance on China. India backs this new initiative, with External Affairs Minister S. Jaishankar attending the 2026 Critical Minerals Ministerial, which brought together representatives from over 50 nations.

On the other hand, Taiwan produces roughly 60% of the world’s semiconductors and almost 90% of leading-edge chips. Now, with tariff challenges and supply chain realignments driven by geopolitical instability, it sees India as an attractive new hub offering an abundant talent pool, a large domestic market, and a strategic location.

Several Taiwanese companies are now investing in India to create a semiconductor cluster, including Taiwanese electronics giant Foxconn, which has established a joint venture with India’s HCL Group and set up a semiconductor unit in the Yamuna Expressway Industrial Development Authority region near in Uttar Pradesh. The new unit, the sixth under the India Semiconductor Mission, is set to begin operations by 2027, and is expected to handle a monthly capacity of 20,000 wafers, with an output of up to 36 million units per month.

Taiwanese semiconductor firms are also preparing to make significant investments in India. The Powerchip Semiconductor Manufacturing Corporation (PSMC), one of Taiwan’s leading pure-play foundry companies, will partner with the Tata Group to build a mega semiconductor fabrication facility in Dholera, Gujarat in 2026. Tata Electronics, in collaboration with PSMC, will invest more than 910 billion rupees ($10 billion) in the project. The plant will have the capacity to produce up to 50,000 wafers per month, using data analytics and AI-enabled automation for improved efficiency, and it is expected to generate more than 20,000 skilled jobs.

Taiwan’s position as a global leader in electronics manufacturing and semiconductors makes it a natural fit for India’s ambitions. The global semiconductor industry is projected to reach $1 trillion, and Indian semiconductor demand is expected to exceed $110 billion by 2030. This semiconductor manufacturing partnership will help de-risk global supply chains and provide high-tech employment opportunities.

Geostrategy plays a crucial role. India faces a widening trade deficit with China, exposing deep structural vulnerabilities. In 2024 and 2025, the deficit reached a record $99.2 billion, up from $85.08 billion in 2023-24, and $73.31 billion in 2021-22. For Taiwan, this investment helps maintain its relevance and assertiveness at the negotiating table with China. It secures rare-earth supplies for its expanding domestic industry and ensures dominance in the global market. In this context, India becomes critical to diversify supply chains beyond the U.S. and China — an urgent priority amid the Indo-Pacific region’s unstable geopolitical environment.

Yet, despite its potential to help reduce India’s dependence on China, Taiwan has not been at the center of India’s Free Trade Agreements (FTA) strategy. An FTA with Taiwan would be essential to strengthening the partnership, serving two strategic purposes: first, leveraging Taiwan’s semiconductor expertise to develop a strong domestic manufacturing ecosystem; and second, reducing India’s heavy dependence on Chinese electronics imports. Together, these outcomes would also help mitigate national security risks associated with supply chain vulnerabilities.

Double coincidence of wants

While Taiwan offers manufacturing technology, including cutting-edge expertise in electronics, semiconductors, and smart machinery, India provides both scale and resources with a skilled workforce, a growing consumer market, and an abundance of rare earths. This complementarity makes cooperation necessary to face industry challenges. Additionally, shared democratic values provide the basis for a common ethos and a foundation of trust, allowing ties to quietly but steadily grow.

However, developments so far reflect intent, rather than actual implementation. The PSMC-Tata collaboration is at a nascent stage, and moving into mass production by next year would be ambitious. Similarly, India’s reserves are significant, but turning them into a usable supply requires streamlined action spanning extraction, separation, refining, and magnet-grade production capacity. This requires a detailed, direct strategy to transform the minerals underground into a reliable supply chain.

Obstacles also include environmental permits, expensive infrastructure, and ambiguous regulations. Therefore, an action plan is needed to clearly signal intent and encourage both investors and policymakers to coordinate Taiwan’s technological expertise with India’s natural resources. Strategic partnerships with countries like Japan, Taiwan, and Australia can help diversify import sources and reduce dependence on China. Moreover, domestic exploration and production must be scaled up urgently.

What lies ahead?

In a global landscape where China dominates resource refining and processing, Taiwan sees India as a potential alternative source of minerals. For India, the push for rare earths is part of a broader strategy for critical minerals, connected to its goal of clean energy transition and defense self-reliance. If its resources are fully tapped, India could become a long-term supplier of critical minerals, supporting diverse applications ranging from EV batteries to advanced defense systems. Friend-shoring and relocating critical imports from adversarial suppliers to trusted partners are vital instruments to address structural vulnerability.

Taiwan thus emerges as a natural partner with proven strengths in semiconductors, chemicals, electronics, and computer hardware, providing high-value goods. The synergy between India’s natural resources and Taiwan’s technology requires investments, joint processing, R&D in refining, regulatory clarity, technical refinement, and leveraging existing business forums to facilitate business-to-business and government-to-government links. There is a need to move beyond raw-material supply to integrated tech-mineral ecosystems. By leveraging their complementary strengths, the partnership could be mutually beneficial for both economies.

This also nudges American semiconductor companies to invest in India. For example, in June 2023, the Gujarat government signed an agreement with Micron to establish a $2.75 billion semiconductor assembly and test facility in Sanand, Gujarat, which recently opened. This facility, marking the first major investment by a US semiconductor company in India, will focus on transforming wafers into ball grid array integrated circuit packages, memory modules, and solid-state drives. Other fabrication units are expected in the coming years.

Washington is launching several new initiatives focused on critical mineral supply chains, and India is strategically placed to be an indispensable partner. Furthermore, the critical mineral MoU could be converted to a critical mineral partnership agreement, serving as a starting point for an FTA. These are welcome steps to build an alternative resilient partnership, and triangulation in this regard among like-minded countries would help secure the critical minerals supply chain—from mining through processing to final use—and de-risk supply chains promoting technical cooperation, improving financing mechanisms, and creating a multilateral knowledge bank.

Dr. Varuna Shankar (varuna[email protected]) is an Associate Fellow at India’s World Magazine, based in New Delhi. She completed her PhD at the School of Liberal Arts at G.D. Goenka University, India in 2025. She is a Non-Resident Vasey Fellow at the Pacific Forum. She holds a master’s in Political Science from Jawaharlal Nehru University (JNU) and a Bachelor’s in Political Science (Hons) from Jesus and Mary College, University of Delhi. Her research interest focuses on East Asia, the Indo-Pacific region, and Indian foreign policy.

Media: indiaspend.com

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