A potential crisis in the Taiwan Strait poses an existential threat to India's economy, far exceeding the impact of the recent Strait of Hormuz disruption, according to former Foreign Secretary Vijay Gokhale. Gokhale emphasizes that India is currently underestimating and unprepared for the severe economic and social consequences of such an event.
A Looming Threat Greater Than Hormuz
The recent closure of the Strait of Hormuz, though now winding down, caused the largest supply disruption in global oil markets, pushing oil prices over $100 a barrel and creating significant anxiety across Asia, Europe, and the US. However, Gokhale warns that any crisis in the Taiwan Strait would have a far more catastrophic effect on India.
Despite Taiwan being approximately 5,000 kilometers away, Gokhale asserts that India's perceived distance from the conflict leads to a gross underestimation of its potential impact. He suggests that if the 'Hormuz playbook'—involving blockades, missile, and cyber attacks—were applied to the Taiwan Strait, the ramifications for global trade, and specifically for India, would be immediate and severe.
Malacca Strait: India's Vulnerable Lifeline
A critical point of vulnerability for India is the Malacca Strait, a vital maritime chokepoint connecting the Indian Ocean and the South China Sea. Gokhale warns that a Taiwan Strait crisis would immediately halt all trade through the Malacca Strait, which is traversed by over 80,000 ships annually.
India's economy is highly dependent on this route, with 40% of its total trade passing through the Malacca Strait. Exporters and importers alike would suffer immensely. Furthermore, with 30% of all global supply chains originating in China, a disruption would lead to a worldwide collapse of supply chains, impacting even those Indian businesses not directly trading with the East, as Western markets would cease purchasing goods.
Economic Collapse and Social Destabilization
The crisis would extend far beyond trade. Gokhale highlights that 90% of advanced semiconductors are sourced from the region, including Taiwan, Japan, Korea, and China. As a heavily service-dependent economy, India's e-commerce, e-logistics, entertainment, and education industries would face an unprecedented collapse. Such widespread economic paralysis would inevitably lead to massive unemployment and significant social destabilization across the country.
Crippling India's IT Sector
India's vital IT-enabled services sector would also be severely crippled. Gokhale points out that 15 submarine communication cables connecting India to Silicon Valley are anchored in Taiwan. China has already demonstrated its capability to cut such cables, having severed three in the past two years. The disruption to these critical digital arteries would have a profound impact on India's technology landscape.
China's Ambitions and India's Unpreparedness
China has been systematically preparing for years to assert control over Taiwan. While US intelligence agencies concluded in March that Beijing does not currently plan an invasion by 2027, they acknowledge that China has never abandoned the use of force as an option for unification. Former CIA Director William Burns previously stated that US intelligence believed Xi Jinping instructed the People's Liberation Army to be ready for a successful invasion by 2027.
Gokhale strongly criticizes India's current stance, stating a lack of studies or understanding regarding the implications of a Taiwan Strait crisis. He underscores the urgency for India to recognize the direct threat:
"We should not think Taiwan is too far or that it's not my problem if China invades Taiwan. It is one hell of a problem for us."