TAIPEI (Taiwan News) — Taipei and New Delhi are discussing plans to set up a fab in India, in addition to reducing tariffs on components used in chip production by the end of the year. Sources told Bloomberg that Taiwanese and Indian officials have recently discussed setting up a US$7.5 billion (NT$208 billion) chip plant in India that could produce semiconductors for things like 5G products and electric cars. India is evaluating viable locations that have enough land, water, and workers, and the South Asian country would put up 50% of capital expenditure from 2023 along with tax breaks and other incentives, per the report. In 2018, Taiwan and India inked an agreement to expand on investments and economic ties. Taiwanese officials are eager to show progress by seeing tariffs reduced for dozens of components used in chipmaking, sources said. Taipei is hoping the investment agreement will eventually lead to a long-sought free trade deal; however, New Delhi has shown hesitancy on this front over fears Beijing would retaliate economically. Taiwan is concerned that the lack of established chipmaking infrastructure in India could pose some hurdles. Taipei also has concerns about water and electricity supplies and has said it may be more realistic for New Delhi to begin setting up a chip design sector prior to constructing fabs, sources told Bloomberg. India is looking to attract more high-tech investments as it pushes for more self-reliance with semiconductors, while Taiwan is eager to bolster its diplomatic presence in the face of continuing military, political, and economic pressure from China.