India Inc must invest in China, says Indian Ambassador

While India-China bilateral trade is set to touch $60 billion (Rs 2.8 lakh crore) in 2010, Indian companies must establish a local presence in China to expand their business opportunities, said Indian Ambassador S Jaishankar in an address to the India-China Business Seminar at Chengdu on Tuesday.

This was on the heels of a candid talk in Sichuan at the Institute of South Asian Studies, where he said “most Indians regard China with respect for its achievements over the last three decades” and some view China as a “source of anxiety”, while for others, “it could well be an opportunity”. The ambassador underlined the importance of closer economic relations between the two Asian giants.

Drawing from the experience of Indian companies established in China, Jaishankar urged the Chinese government to reduce import duties on finished goods, expedite standards’ audit of Indian suppliers for local tenders, and review local content provisions to help Indian companies do more business in China.

Noting that China enjoys a huge trade surplus with India, he said localisation of manufacturing in China by Indian companies would help promote trade as well. Thermax, Videocon and L&T are among those who already have such a presence in China.

The ambassador also said the Indian information technology industry could do more in China with easier systems for granting work permits and visas and more helpful tax regulations. He noted that “the big opportunities are really in meeting the IT demand of state-owned enterprises that are moving away from building their IT to buying it. Here, we have great potential for win-win outcomes that I hope our Chinese partners strongly encourage. China’s rich human resources also offer possibilities for operations here of the Indian bio-technology industry.”

He also sought a ‘larger footprint’ for Indian banking and financial institutions in China and urged “stronger inter-bank relations that reduce the costs of trade finance and guarantees”.

In the pharmaceutical sector, Indian companies seek removal of regulatory impediments and faster approval for solutions for the Chinese market. He regretted that efforts to address phytosanitary obstacles for the export of fruits and vegetables from India had made very slow progress.

Jaishankar told his Chinese audience: “India seeks more business in China, it remains open to exports from China. Greater trade and economic cooperation is an integral element of the new relationship that we both seek to build. Challenges need solutions, not further complications.Where Chinese competitiveness and capacities work to advantage, it would naturally influence Indian companies when making their choices.”

At Sichuan, he outlined a “three-pronged strategy” to build stronger ties and create wider public support for closer bilateral relations. These, he said, are:

 

Enhancement of trust and understanding is the most urgent requirement. Our leaders have a vision of our ties that does not necessarily seem to have percolated down uniformly. Both sides have an interest in building stakes for the other to ensure stability and growth.We need more contacts at every level, between the bureaucracies, the military, business, academic institutions, the media and in mass perception. 
 

Differences, where they exist, such as on the boundary issue, will have to be managed and not allowed to impede either functional bilateral cooperation or convergence on global issues. Activities like trade or hydrological cooperation in forums like Doha or Copenhagen should go forward on their own merit. 
 

Given the progress in our ties, we must ensure that third parties do not come in the way of further improvement. Both sides need to be realistic and mutually sensitive. “When I came to China for the first time last year, I was questioned at length about Indo-US relations. This seemed strange, coming from a country whose own relations with the US were more advanced. But it does tell us that there are still doubts to be addressed and changes to be explained.”

Asking what Indian expectations are of China at this stage, Jaishankar said, “I would sum it up as displaying sensitivity on what matters most to Indians, while accepting that we cannot agree on all issues just yet.”

He listed combating terrorism as India’s foremost concern today. Stating that this is not about religion or territorial concerns, he said, “It is India’s pluralism that is being attacked and China, as a pluralistic society itself, should perceive a common threat. Second, to achieve its developmental goals, India requires a stable and harmonious environment. China can contribute to that. Third, just like China, India has international aspirations, too, and expects that its historical sympathy and understanding for China’s would be reciprocated. A wise approach to international relations requires coming out on the right side of history.”