INTRODUCTION

The current fashion of regionalism has brought about changes in preferential treatments leading to the enhancement of trade and investment. These occurrences have promoted international specialization of industrial production. For countries that are outside Preferential Trade Agreements (PTAs), their industries could face rising production costs that could negatively affect their economies. Therefore, if they do not sign PTAs, they would risk diminishing their global competitiveness. Since the European Union (EU), the Americas have already reached a high level of regional integration, and Asia has also begun to pursue regionalism.

In the face of rising regionalism, India has continued to shift its economic and trade policies to focus on countries in the Asian bloc, such as increasing the linkages with China and strengthening ties with the Association of Southeast Asian Nations (ASEAN) through the ‘Look East Policy’. The objective is to raise the level of India's investment and exports to countries within the Asian bloc. The rise of recent regionalism has placed Taiwan outside East Asian regionalism because of political reasons. To protect against the negative impact of being an outsider, Taiwan's businesses have promoted Foreign Direct Investment (FDI) instead of directly exporting from Taiwan, to maintain markets for their products.

Against this backdrop, this paper aims to explore Taiwan-India economic relations under regionalism. Specifically, how would India and Taiwan respond to the rise of regionalism in Asia? The ultimate objective of this paper is to find out the approaches that could be considered or employed to strengthen bilateral economic relations in the face of regionalism.