India Unfazed by Trump's Threats over Russian Oil, Pakistan Pivot | Taiwan Talks EP684

0:00 New Delhi has killed three terrorists and it says were responsible for gunning down 26 mostly Indian tourists in Kashmir April Much rifle rifle. [Applause] The terrorist incident triggered a 4-day war with Pakistan in May. An intense conflict that was debated in India's parliament this week. The military confrontation not only raised tensions with Pakistan but unexpectedly with Washington. Donald Trump claims to have

0:47 brokered the ceasefire which Delhi denies. He invited Pakistan's army chief as Munir to Washington DC and later announced Pakistan downed five Indian aircraft, a claim that India disputes. What impact is all this having on US India ties when coupled with Trump's 25% tariff? a possible tariff against BRICS members and possible 100% tariffs as part of secondary sanctions on Russia. And do these tensions create room for China to maneuver as Beijing and Delhi accelerate their fragile dant 5 years after 20 Indian troops and an undisclosed number of Chinese soldiers died in hand-to-hand combat in the Himalayas. Hello and welcome to Taiwan Talks. I'm Ian Kavat. To discuss all this, we have special guests from India

1:32 joining our show today. C. Raja Mohan, Council for Strategic and Defense Research, Distinguished Fellow and Aki Matur, Asia Society Policy Institute, New Delhi Senior Director. A very warm welcome to both of you for the first time on the show today. This is Donald Trump's account back in June of how Operation Synindor ceasefire was broken. Take a watch. >> Said, "Look, if you're going to go fighting each other, it's going to it was getting very bad. You know how bad that last attack was? It was really bad. if you're going to go fighting each other, we're not doing any trade deal. No, no, no. You have to do a trade deal. They said, we're not doing any trade deal. And in fact, I had the general who really was very impressive. Uh the uh general from Pakistan was in my office

2:20 last week. Uh you know, Prime Minister Modi, he's a great friend of mine. He's a great gentleman. He's a great man. And I got them to reason. I said, "We're not doing a trade deal if you're going to fight. And if you're going to fight each other, we're not doing a trade deal." And you know what they said? No, I want to do the trade deal there. We stopped the nuclear war. Go ahead, >> Roger. Let me start with you first. What does a statement like that what impact does it have on India's bilateral ties with the US? >> No, I think uh these claims uh have created a a lot lot of uh toxic and environment in which the relationship is being conducted for nearly 25 years. I mean the relationship has been on a continuous upward trajectory. uh and a lot of effort went into building mutual trust bipartisan uh

3:08 successive administrations from the last years of Clinton then we had Bush then we had Obama then we had Trump even Trump the first term was very very different from the from the second term and then then President Biden >> so I think the the way the personal style of Trump the last time around when he was president he used to daily attack Pakistan saying Pakistan is playing both sides of the street. I think in terms of the claims he's made, look, I think he himself was not directly involved. So his secretary of state Rubio had called both Indian and the Pakistani foreign ministers once. You had JD once once calling the Indian side. Uh in fact our minister was saying in the parliament yesterday uh that actually what India

3:55 told the American interlocutors was if we want to have a ceasefire you must tell the Pakistani military to call the Indian military. So that's how the ceasefire actually occurred. The director general military operations in Pakistan called his Indian counterpart and said look uh we want a ceasefire and that's how the ceasefire was. >> I heard that he even said more than that. He he actually pleaded for relief from the Indian barrage. Yeah, India really really hammered using a whole range of missiles including bramos. I think that had a big effect on Pakistan. So in the end >> this was really where Pakistan telling India look let's stop now. >> Yeah. So it certainly wasn't trade pressure from the >> that is a complete see at least you can in the first case Americans were involved >> they did make the phone calls

4:40 >> but this idea of saying I told them no trade deal no peace that was completely his imagination. And what and what do you make Raja of this outreach to Munir uh you know seem to be bypassing the civilian government Islamabad? >> Oh yeah. Yeah. I I think the problem is even when the Americans uh talked about democracy they always dealt with the military. But I think what is diff what is interesting this time is for four years Biden administration did not even once reach out to Pakistani prime minister or the Pakistani military >> pulled out of Afghanistan and say look we're not going to have much to do with Pakistan. And before that as I mentioned in Trump's four years there again the relationship was very frozen but this time around I mean I think uh Trump seemed to have taken a fancy to the Pakistani general

5:26 >> and tell me you know I I believe that the concerns uh from India are very deep-seated. They date back to the cold war when effectively the US had that Pakistan military engagement. It it basically >> no as recently when if you go back to 911 2001 between 2001 and 2000 when Trump was a president 2018 or so I mean Pakistan got almost $40 billion worth of uh you know assistance both military and civilian and you used to remember General Musharov uh is I'm not talking about the early cold war I mean this is post 911 he was serenated everywhere >> he was treated like you know he's the front line of global war on terror so Pakistan had a key role did have a key role because it was next to Afghanistan.

6:12 So I don't think we are seeing anything new. I mean so this is really >> but there's a a renewal of something as you said had been dormant. >> No that's what is it was dormant during the Biden administration. >> Right. >> So these guys have reconnected but I'm not saying India is not losing its sleep because US and Pakistan are talking to each other. No, >> it's not okay. Is is not doesn't fear of being silent. >> We've seen this movie before. So, so I don't I don't see in fact >> or the rise of terrorism >> that is a problem and and I think >> the impacts on India. >> Yeah. So that is a problem and I think on that what India is saying now Prime Minister Modi has said look we're going to deal with every time there's a terror attack we're going to respond with power. >> So India is not complaining to the Americans saying look please do something about Pakistan. This now India is saying look if you hit us we're going to hit you back. >> Yeah.

6:58 >> And hit you back hard. So what's the link between Munir and the terrorists or the the especially in Kashmir wasn't it? >> Look I think for nearly 50 years Pakistan has trained armed terrorist groups >> as part of state policy. So they used to operate in Afghanistan to destabilize Afghanistan. Some of them were directed at India. So this is again I mean a long-standing policy of using what they call so-called strategic assets of creating so-called militant groups which actually are funded by Pakistani state and work as proxies for the Pakistani state but that has been going on for years and I think India has raised this issue internationally uh the uh through the UN >> some terrorists have been designated

7:44 groups and even even the Trump administration recently India says look there's a group called the resistant front TRF. So the American government has just declared it a terrorist organization. >> So it's not that Americans and we are not talking to each other. >> So so the the problem is Trump's personal style >> and the optics of this for all the talk about US and Pakistan relationship right now. We haven't seen any big deals yet. M >> you know yesterday Trump said look we're going to give them 19% tariff rate >> and that Pakistan has offered its oil fields to to US and the US is going to designate a company to explore oil and then he also said uh maybe someday we'll sell that oil to India. >> So I mean I I'd like to see them

8:30 convincing Pakistan because Pakistan is always opposed to trade with India but if we can get Pakistan to sell oil to India welcome. >> Right. Let's go to the trade aspect now. So, how does um actually direct this to you the combination of Trump's tariffs, Trump's 25% tariffs um so we're just showing on the screen now possible BRICS tariff people have talked about 10% and possible 100% tariffs as secondary sanctions on Russian oil. How does this um impact the uh bilateral relationship? >> It's certainly a a time of uncertainty. The United States is uh not just one of the largest trading partners, it's amongst the top three but also it's has

9:16 been uh one of the largest foreign investors in the country and also the largest participant in India's uh capital markets. Mhm. >> And so the impact of a a tariff negotiation or is not just purely on what happens to trade. It also has implications for a broader economic partnership with the United States. >> Keep in mind that also there are so many American companies that are based in India that are exporting from India or or or in services. So, so what happens to the American companies that have invested in India or manufacturing in India and then they want to uh export back to the United States?

10:01 >> At the moment they are included they are going to get impacted. Uh is it possible that uh a call out is made for a special clause is made for the American companies. That's possible. Those exceptions have been made by the United States government. But at most that can target a few companies. I mean there are so many companies in India that are operating and the economic integration is so deep that it'll be hard to uh hard to impose such a such an exception you know more comprehensively. I would say that actually it's really the the negotiations at this point while they have indicated 25%. But they've also p they've also hinted that it is not complete. I think that there are

10:47 negotiations also on what India can do on energy and on defense and so I think we'll have to wait and watch what transpires with the negotiations. >> Okay. So that's not the final um tariff figure. Um, we can also take a look at Trump's truth social post on Thursday where he said, I quote, "I don't care what India does with Russia. They can take their dead economies down together for all I care. We have done very little business with India. Their tariffs are too high among the highest in the world." So, Raja had mentioned this issue of trust. Is this this sort of tone is it starting to you know perhaps chip away at that trust that had been built up as Raja had said uh for for decades. >> Uh trust is important but in economics

11:34 and business contracts are equally important and so we will have to see what kind of commercial agreements are worked out. I think that's the uh the the cornerstone of an economic partnership. the markets were down a little bit when the first when the first news broke out but they've recovered again already. >> Let's take take a quick look at the uh tariffs for countries around India and perhaps competitive with India. These were uh announced by the White House on uh this morning here in Asia. You could see the the table. Yeah. Um so China to be announced is not included in there. Uh India 25%, Taiwan on 20%. I think Taiwan was hoping for lower than that. Bangladesh, Sri Lanka also on 20%. So

12:22 lower lower than uh India there's also as you had mentioned Pakistan on 19%. Uh and then Vietnam, Indonesia, Philippines on also on on 19%. How would India see that in terms of because it it seeks to be more competitive than its rivals. How is that looking so far for you? If you go purely by numbers, of course, we'd want to have a competitive number. So a 15% or a 10% which is more aligned with what Japan and Korea have done would be more favorable to us. No doubt again uh equally what matters is how how the businesses perceive what is happening. So if say we had a a say only

13:08 a 10% tariff but say our foreign exchange rate if the rupee depreciates by a much larger amount then it's it's going to negate the win that we have from the negotiation. >> Um if we have a low tariff and we have uh a stable exchange rate but we are not seeing foreign investments come in then neither the tariff rate nor the nor the exchange rate is going to be helpful. We need the foreign direct investment to come in >> and like I mentioned when we started the America is actually the largest foreign investor in the capital markets too. >> So we need capital whether it is through FDI or foreign institutional investment. We need capital and capital is scarce. One of the messages I want to convey is capital is scarce. It's getting increasingly scarce and in India we

13:54 would welcome capital. No doubt that our trade negotiators are are working to bring that down. uh but I think my eye is on a broader set of indicators. >> Right. Okay. Now, meanwhile, this week, India resumed tourist visas for Chinese after a 5-year suspension and appeared to welcome back Chinese investment with the announcement of a joint venture between Dixon, one of India's largest electronics manufacturing services providers, and Longer, a Chinese design house that serves major global smartphone brands. The venture will manufacture smartphones, internet of things, and automotive devices. These are just the latest moves as part of a thoring of relations between the two Asian powers that began in 2024. But at the end of June, China and Pakistan with Bangladesh began discussing a new block

14:40 excluding India that could replace the SARC or South Asian Association for Regional Cooperation which had been established to foster regional cooperation and economic growth. SARKC was suspended due to IndiaPakistan tensions in 2017. Raja let me uh ask you first. So given Beijing is the biggest buyer of Russian oil um along with with India to what extent can we say that you know the secondary sanctions um the new US tariffs you know these sort of external um uh pressures do they bring India and China together under shared interests? Not really. In fact, uh while we've been discussing India's problems

15:26 with the US, uh but our problems with China are much deeper. See, we have a uh you know nearly 4,000 km long border which is disputed. Uh both sides don't agree on the length of the border. They don't agree on where the border is. And over the last uh decade or so, I mean, there's been intensely militarized. >> So there've been at least frequent uh crisis. We had one in 2013, 2014, 2017, then another one in 2020 which you which you referred to. >> So I think the border is a very is a tinder box. So I don't see that problem going away. >> So because we nowhere near the actually resolution of the of the dispute itself. M >> second I think uh the on the economic issue I'm sure Akai is going to talk more about it but the fact is we have a

16:12 massive trade deficit with China almost $120 billion trade hundred billion dollar deficit while US we have a surplus >> uh so so there is that problem as well and third what Pakistan does with our neighbors with Pakistan Bangladesh Sri Lanka is a continuous uh you know undermining of India's position in the region so to sort out these three structural issues is is not going to be possible. I don't see answers for them anytime in the near future. >> But on the question of Chinese investments, that's something I'm sure. Yeah. >> So, so basically that that underlining rivalry and conflict is still very prevalent and >> know the Chinese say the the distant power and the near power. The near power poses more problems because they're sitting on our territory. America is

16:57 not. So, we have a trade dispute with the US >> but not a territorial dispute, not a dispute over sovereignity. while the challenges with China are far more deeper and affect us much more directly. >> Right. And actually how significant is that joint venture? Is this something that's that's quite exciting sort of commercially? >> I think uh it's an indicator >> of uh maybe thawing economic relations. Of course on the details I did notice uh the more details are yet to come out but >> the the Indian venture has the majority stake so far and the Chinese have come in as a minority stakeholder >> 74% >> 74% to so I think uh it's a certainly an indicator >> and it is not uncommon for uh the Indian

17:46 private enterprise to demand a deeper economic relationship with China. The US has such a deep relationship with China chi with China. Taiwan has deep relationships with China. So I think >> it was somewhat unnatural that we had had >> uh our economic relationship with China had stalled. I think this is some correction. It's coming back to its natural state. It needs to reach a certain equilibrium where an economic relationship can be maintained despite uh some of the political and geopolitical issues uh that are uh that you know constrain the relationship. >> I would say that our eyes uh will be on uh foreign investment screening and economic security. Of course, there are certain sensitive sectors. there are

18:32 certain critical sectors and uh I do not see Chinese investments coming into those critical sectors just yet >> but uh but at least in these sectors I think uh that's an opening that we can start to build on. >> Okay. And Roger we mentioned SAK um it it appears um that China and Pakistan have wanted to uh create a a replacement block uh for for SAK. Now Nepal is is unwilling to do that. Um with all of this is China genuine about the raproment with India or is it mostly focused on the commercial benefits? >> No it's not either or. >> So what we have with India is really

19:17 after 5 years of intense conflict or tension that we barely started talking to each other. So it's slight relaxation of tensions >> but the as I said the issues that dividers are so deep they have to be managed. So so that's one but Pakistan sorry US has sorry China has always had very good relationship with Pakistan they call themselves iron brothers it's higher than the Himalayas deeper than the Indian Ocean. So it's a it's a 70-y old relationship and where in the past Pakist China had supplied nuclear weapons to Pakistan, China had supplied missiles to Pakistan and in the ops synindur we've known that they've also were giving them uh information in the middle of the battle intelligence >> possibly satellite

20:02 >> the co-production of fighter aircraft >> uh there is ship building Chinese ship building in Pakistan so it's a very intense relationship >> for many of us in India I mean I think it's a we have a two situation >> between Pakistan and China. Their collaboration has always been a threat. So I I don't think Chinese are going to tell us, look, I've opened a little dialogue with you, therefore I'm going to stop my relationship with with Pakistan. So that's going to be part of the challenge >> or stop trying to exclude you. I mean, this is exclude. It's not just we maintain our relationship with Pakistan, but we want to form blocks in order to exclude you. >> They already have a block. I mean if you see look if you see China's best allies uh you know in the region I mean one is North Korea one is Pakistan >> where the intensity of the relationship has been so deep. So that's not a that's not new for us but that's a reality we

20:49 live with all the time and we had to for example you don't you wouldn't have the terror coming from Pakistan if Pakistan had not had nuclear weapons provided by China. M >> so in some ways China is the source that protects Pakistan >> uses Pakistan as a as a you know proxy to balance India >> so to form a new block like if they form a regional block saying look we we want to do trade and cooperation >> they it really doesn't add very much to already what they do if you want to see the damage they do to us >> through the relationship >> so it doesn't it doesn't change the picture at all right now when it comes to India Taiwan ties Taiwanese firms like Foxcon Pegatron and Wistron have already set up manufacturing plants in India. Assembling smartphones for global giants like Apple, Foxcon alone has

21:36 committed 1.5 billion US dollars in investments for a new production facility in Tamil Nadu, reducing dependence on China and strengthening India's position as a global manufacturing hub. Several other industries offer synergies including renewable energy and semiconductors, both in which Taiwan is a leading player. Taiwan's power chip semiconductor manufacturing corps is building a semiconductor fabrication facility in Gujarat in a joint venture with India's Tata group. Further potential lies in AI, 5G technology and biotechnology in which India is the pharmacy of the world supplying 20% of global generics uh generics market. So Ashar let me come to you. So um is it is it true in terms of Taiwan India relations u that they have been allowed

22:23 to uh flourish more quietly strengthen as India's ties with China have uh deteriorated. The the reason why I ask is because previously analysts have said to us that uh India never wanted to openly provoke China. It still doesn't really want to do that. But when after Gowin after a series of of clashes fatal clashes it took a different approach. >> I would say that you know India has an aspirational power too. You know it has it has certain standard certain gold standards of what it aspires to be. It looks towards Taiwan and sees what it has done with semiconductors. It sees the trajectory it has had from over the last 25 30 years. the big companies

23:10 coming into India provide that marker that goal that aspiration. So I I think these are really uh uh standard bearers for a foreign investment in India. I think the next challenge that we have in India is uh we have currently 250 Taiwanese businesses that are operating in India >> and uh there are 50,000 Taiwanese businesses in China. Now we have to find a way to attract more of these Taiwanese businesses to India. It's the Taiwanese software companies also on cyber security uh that are doing so well that we need to attract and we need to find those partnerships. >> Also, China is building the quote project of the century the world's biggest hydropower dam in Tibet at a cost of 167 billion US more than four

23:58 times the cost of the world's largest dam, China's three gorgeous dam. This is Chinese Premier Lee Chang breaking ground near Ningshi along the Yaong Tangpo River. It will set a record output of 70 megawws which satisfies the power needs of Poland and is three times the output of Three Gorges Dam. The new mega dam is expected to have five Cascade hydropower stations along the river as it drops 2 kilometers over 50 kilometers on a U-shaped bend. Both Bangladesh and India have expressed concerns to China fearing that the dam might disrupt water flow downstream. And Roger um lastly on the India Taiwan relationship uh what is it about Taiwan that uh that means that no matter what

24:44 happens with India's relations with China that the Taiwanese relationship will keep on on growing. What does Taiwan offer that China does not? Look, in fact, it's very interesting that uh the India Taiwan relationship began to take off in the early '90s when India was facing an economic crisis. Uh that's when India turned to Taiwan and says that look can we work together? Uh it was also the period when India had opened up its economy. So in a way the the a natural engagement on economic issues began. But if you look at '90s 2000s, Taiwan and China had a great relationship. Uh the interdependence was growing between them. But what we have today the challenge is uh as the security situation deteriorates in Asia, China becomes more assertive uh China

25:31 moves away from the idea of a peaceful unification to not ruling out force as President Cinping has said that is a matter of concern for India. I mean I think India strongly stands by the idea of a rules-based international order >> where changing borders by use of force uh is unacceptable. In fact, that's a problem in China as well. >> For example, in the Himalayas in the Galwan, the whole problem was >> China discarded all the previous agreements and tried to unilaterally change the territorial disposition. >> So if uh if China uses force against Taiwan, that will have a disastrous effect on the entire Asian region. So therefore, for us, I think a chi Taiwan and China the relationship should be peaceful. But if there's a war to take

26:17 over Taiwan, I think for us that will mark a profound shift in the regional politics. >> Okay, we're going to have to wrap it up there. We've run out of time. Thank you so much Raja Moan and Ashai Matul for joining Taiwan Talks today. If you liked our show, please search for us on YouTube. Give us a thumbs up, hit subscribe to our channel. Thank you for watching the show today. Stay safe and see you next time.