Amid tension rising between China and Taiwan in recent days and the US already declaring that it will defend Taiwan in the event of an unprecedented Chinese attack, armed conflict between the world's two superpowers has become a real possibility that in turn would be disastrous for the global economy, which has already been battered by the Covid-19 pandemic and Russia's invasion of Ukraine.

The Russia-Ukraine war has led to alarming supply chain issues, affecting prices of fuel and certain agricultural products across the globe and even threatening food security in some countries. According to some economy watchers, a global recession is looming, and although this concern may seem premature as of now, a similar conflict between China and US-backed Taiwan would definitely lead the global economy to such a catastrophe.

According to an estimate, Taiwan Strait witnesses nearly half the world's container ships and around 20% of global trade passing through it and this implies how important this narrow strait is for global supply chains. This 180-kilometre wide strait – one of the business in the world – is used to transport vital semiconductors and electronic equipment from South Asia to global markets. Additionally it is also a key route for natural gas.

So, if the Taiwan crisis boils over in coming days, the Indian economy will suffer as well. Additionally, India has important trade relations with Taiwan, with bilateral trade between the countries reaching USD 7 billion last year. Taiwanese firms are increasingly investing in India and the two countries are also talking about a free trade deal as well. In such a scenario, a China-Taiwan conflict could be a double whammy for India.