India, Taiwan and the Indo-Pacific: Economic–Security Strategic Partnership and Expected Utility Theory

Published date01 April 2021
Date01 April 2021
Subject MatterResearch Articles
05AIA992531_ncx.indd Research Article
India, Taiwan and the
Journal of Asian Security
and International Affairs
Indo-Pacific: Economic–
8(1) 98–126, 2021
© The Author(s) 2021
Security Strategic
Reprints and permissions:
Partnership and
DOI: 10.1177/2347797021992531
Expected Utility Theory
Neel Vanvari1 and Alexander C. Tan1,2
The China–India border dispute has witnessed escalations recently with China
making fresh claims along the disputed border and deaths of Indian military
personnel. This study examines the likelihood of a strategic partnership between
India and Taiwan. We begin by assessing India’s ‘Act East Policy’ and Taiwan’s ‘New
Southbound Policy’ for any points of congruence between these two policies.
We then propose an expected utility model of India’s decision calculus. Using
the theoretical implication of the model, we then examine the likelihood of a
strategic partnership along two dimensions—an economic and a defence–security
partnership. This study argues that the value added by an economic strategic
partnership between the two countries may be substantial, and the likelihood
of such a partnership may be significant. However, the likelihood of a defence–
security partnership is substantially less in the bilateral sphere, although at the
multilateral level there are areas where defence cooperation can occur.
Indo-Pacific, India, Taiwan, economic–security strategic partnership
The India–China border dispute has been a point of contention between the two
countries since the 1960s. It witnessed a flare up when a brawl ensued between
1 Department of Political Science and International Relations, University of Canterbury, Christchurch,
New Zealand.
2 Department of Political Science and Taiwan Institute of Governance and Communications Re-
search, National Chengchi University, Taipei, Taiwan.
Corresponding author:
Alexander C. Tan, Department of Political Science and International Relations, University of
Canterbury, Christchurch 8041, New Zealand; National Chengchi University, Taipei 116, Taiwan.

Vanvari and Tan 99
Indian and People’s Liberation Army (PLA) soldiers in early May 2020 in the
Pangong Tso area along the disputed Line of Actual Control (LAC) (Singh,
2020a). A violent clash between Indian and Chinese soldiers resulted in the
death of at least 20 Indian soldiers and an unconfirmed number of PLA soldiers
in June 2020 (BBC, 2020). Since then, several efforts at disengagement and de-
escalation through talks between high-ranking military officials and diplomatic
initiatives have proven to be unsuccessful with one Indian official stating that ‘the
overall de-escalation of the conflict is a long way off’ (Indian Ministry of External
Affairs, 2020a; Singh, 2020b). The PLA has also been opening new fronts in other
areas along the disputed LAC such as the Depsang Plains (Singh, 2020c).1
In September 2020, there was further escalation along the LAC when Indian
soldiers occupied strategic positions at a height overlooking the PLA troops in a
night-time stealth operation (Sen & Chaudhary, 2020). India stated that this was
in response to China breaching previous disengagement agreements and India’s
‘defensive move’ was to counter the PLA’s attempt to occupy new forward
positions and unilaterally change the ‘status quo’ of the border on the South bank
of Pangong Tso lake (Ministry of External Affairs, 2020b). This was followed by
shots being fired along the LAC for the first time in 45 years as both India and
China accused the other side of firing these shots as a means for further escalating
the conflict (Singh, 2020d).
In light of these recent clashes along the LAC, there have been growing calls
for India to change its policy on China and deliver a more assertive response.
India’s former National Security Advisor, Shivshankar Menon, stated that
India–China ties would be ‘reset fully’ and a return to the previous status quo will
be unlikely (Haidar, 2020). India’s former Ambassador to China, Gautam
Bambawale, argues that this current standoff at the border is different from
previous skirmishes, and by moving military positions on the ground, China
wants to unilaterally define the LAC and ‘present us [India] with a fait accompli’
(Roy, 2020a).2
There have already been developments in India’s response and its broader
policy towards China since the border clashes. In the aftermath of the developments
at the border, the Indian Navy conducted a large-scale deployment of warships in
the Indian Ocean Region (NDTV, 2020). The Indian Air Force has also deployed
fighter jets to bases near the LAC in Ladakh (Zhen, 2020), and as previously
stated, the Indian Army moved to occupy high altitude strategic spots on a
mountain range.
Since the border clashes, in the economic sphere, Indian state-owned oil
companies are forbidden from hiring Chinese flagged tankers and vessels for
shipping (South China Morning Post, 2020). India intends to exclude Chinese
telecom firms such as Huawei and ZTE from 5G technology trials (Chaudhary
et al., 2020).3 In July 2020, India banned 59 Chinese apps, such as TikTok and
WeChat, on the grounds of safeguarding security and privacy by stating that these
apps ‘are prejudicial to sovereignty and integrity of India, defence of India,
security of state and public order’ (Press Information Bureau, 2020).4
There have also been calls for India to engage more extensively with Taiwan in
order to counter China’s influence in the region. India does not have formal

Journal of Asian Security and International Affairs 8(1)
diplomatic relations with Taiwan as India recognises the People’s Republic of
China (PRC)5 and adheres to the ‘One-China Policy’.6 In the past, India has
refrained from playing the Taiwan ‘card’ and India has been hesitant in developing
comprehensive relations with Taiwan to avoid the risk of antagonising China
(Corneilli, 2010, p. 113). India has prioritised developing its economic and
diplomatic relations with the PRC, and as a result, India has not used issues such
as Tibet and Taiwan as leverage against China (Corneilli, 2010, p. 116).
After the border clashes in May 2020, a popular Indian newspaper, the Indian
Express, editorialised that ‘Whatever might be Delhi’s eventual choice on the
Taiwan question, it should not be made either out of peevishness or fear. For some
in Delhi, this is a good moment to pay back China in the same coin’ (The Indian
Express, 2020). Similarly, Namrata Hasija from the Centre for China Analysis and
Strategy argues ‘that India must stop seeing Taiwan through the China lens that
gets activated every time there is tension in Sino-Indian ties. Instead, it is time for
India to develop independent ties with Taiwan across economic and strategic
sectors’ (quoted in Rajagopalan, 2020a).
In the early days of the reported escalations at the border, two MPs from Prime
Minister (PM) Narendra Modi’s Bhartiya Janata Party virtually attended the
second swearing in ceremony of Taiwan’s President Tsai Ing-Wen (The Times of
India, 2020c). In July 2020, India announced the appointment of a high-ranking
diplomat from the Ministry of External Affairs as its next Representative to
Taiwan in order to boost relations with Taiwan in the backdrop of increasing Sino-
Indian tensions (Roy, 2020b).7
As a result of these developments, we ask the following questions: How
likely is the possibility of a strategic partnership between India and Taiwan?
Should India initiate and establish a strategic relationship with Taiwan?

In answering these questions, we assess the likelihood of a strategic partner-
ship along two dimensions—an economic dimension and a defence–security
We suggest that the value added by an economic strategic partnership between
the two countries may be substantial and the likelihood of such a partnership may
be significant. However, we believe that the likelihood of a military strategic
partnership at the bilateral level is substantially less due to Taiwan’s restricted
ability to add value and enrich such a partnership along with India’s own limited
presence in East Asia as well as the South China Sea. However, there are areas at
the multilateral level, which may result in some limited cooperation with Taiwan
being able to add some value to this relationship.
This article is structured as follows. The following section examines India’s
‘Act East Policy’ and Taiwan’s ‘New Southbound Policy’ (NSP) for any points of
congruence between these two policies. We then propose an expected utility
theory to provide a theoretical framework to India’s decision calculus. Following
this, we examine the likelihood of a strategic partnership along two dimensions—
an economic strategic dimension and a defence strategic dimension. In the final
section, we conclude by providing some policy options for Indian strategic

Vanvari and Tan 101
India’s and Taiwan’s Risk Diversification Strategy
India’s Look East/Act East Policy
India launched the ‘Look East Policy’ in the 1990s, although India’s interest in
Southeast Asia had been evident since the 1950s. In the 1950s, India perceived
Southeast Asia as an extension of its own civilisation due to connections like
Buddhism and tilted towards the region as a way of resisting the Western imperialist
model for independent...

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