New Delhi, 20 Dec (KNN) India and Taiwan have started negotiations for a free-trade agreement and setting up a semiconductor manufacturing hub in India it will be the second such facility by Taiwan in a foreign country after its production hub in the United States.

The centre has already proposed a number of sites for the facility and one of Taiwan's leading semiconductor producers may implement the mega project as reported by mint.

The Indian government has already proposed a number of sites for the facility and one of Taiwan's leading semiconductor producers, including the Taiwan Semiconductor Manufacturing Company (TSMC) and the United Microelectronics Corporation (UMC), may implement the mega project.

Taiwan is a major player in the production of chips globally. According to industry estimates, the TSMC manufactures around 50 per cent of all semiconductors globally.

There is a strategic significance of attempting to firm up the FTA and to set up the semiconductor hub according to the press reports.

The move to set up the facility comes amid increasing demands for chips in India by automakers and technology companies, among others, when there is a global shortage of chips.

The proposal to set up the semiconductor hub is largely driven by the strategic significance of the ties between India and Taiwan rather than the commercial aspect of it.

"The semiconductor plant in the US was set up in the reflection of the close strategic ties between the two sides. It will be the same in India's case as well," according to press release.

The government has said to provide incentives worth Rs 76,000 crore to encourage the setting up of semiconductor design, manufacturing and display fabrication (fab) units with a larger goal of making India a global electronics production hub.

India and Taiwan have already held two rounds of talks for firming up an FTA as well as a bilateral investment agreement to boost trade ties.

India has been promoting its ties with Taiwan in the areas of trade, investment, tourism, culture, education and people-to-people exchanges.

The cooperation in the areas of trade, investment and industry between India and Taiwan has been on an upswing in the last few years.

The volume of bilateral trade has grown nearly six-fold from USD 1.19 billion in 2001 to almost USD 7.05 billion in 2018 and India ranks as Taiwan's 14th largest export destination and 18th largest source of imports, according to official data.

By the end of 2018, around 106 Taiwanese companies were operating in India, with the total investment amounting to USD 1.5 billion in the fields of information and communication technology, medical devices, automobile components, machinery, steel, electronics, construction, engineering and financial services.