India wants more than an FTA with China

CHINESE PRESIDENT VISITS INDIA

India and China are not planning a free trade agreement in the near future.

"We are examining a deeper economic engagement with the country. An FTA is limited to goods and tariffs. Since average tariff in China is already between 5-7 per cent, there is not much benefit in having just an FTA with China," Commerce and Industry Minister Kamal Nath said hours before Chinese President Hu Jintao arrived in New Delhi on a four-day visit that will see him visit Agra and Mumbai to attend the China-India Trade and Investment Summit.

Nath said an FTA with China was not on the cards right now.

During the visit, both the countries are expected to sign around half-a-dozen agreements, including protocols on basmati and iron ore. India will also sign a bilateral investment protection agreement with China covering post-entry investments.

Nath, who is scheduled to meet his Chinese counterpart, said the process of giving market status to China was on. "This is not a political decision. There is a process to be followed. We are doing it. It has to be done transparently," he said. He was non-committal on how long would the process take.

Asked to comment on security concerns regarding investments from China, Nath said, "There is no question of country specific FDI screening. We welcome Chinese investments into India. There is a misconception about Chinese investment. I want to correct it. There are a lot of synergies between the two countries which we want to cooperate on."

Nath said bilateral trade with China was on the rise and was expected to touch $ 20 billion by the end of the current fiscal. "The bilateral level of trade was just $1 billion a few years ago," he added.

A CII analysis shows that bilateral trade between India and China has grown tremendously in the last five years and is likely to reach $ 24 billion in 2006 in comparison with $ 17.5 billion in 2005.