CII releases analysis of Indo-China trade potential

The Confederation of Indian Industry (CII) has identified a five -pronged strategy to improve Indian exports to China. The strategy, which is part of the Analysis on India-China Trade that was released by Minister of State for Industry, Mr Ashwini Kumar today is based on a survey of CII membership. The strategy includes:

1. Reducing transaction costs for Indian business through trade facilitation and better infrastructure

2. Improving connectivity for trade with China through increased frequency of direct shipping routes and expansion of air cargo facilities through dedicated terminals and ports.

3. Building India Brand in China through more Indian exhibitions in China to increase awareness about India in Chinese markets. The CII Made in India Shows were referred to as the models for building awareness. Companies felt these exhibitions should be done across several cities in China.

4. Building Better Banking Links and also work on bilateral confirmation of Letter of Credits (L/C) by EXIM Banks of India and China.

5. Exporting higher value added products to China compared to the existing exports comprising mostly of raw materials and intermediates. India exports several products to the rest of the global markets but not to China despite being competitive in those products in global markets.

CII has identified over 140 items in which India is competitive in global markets and what China imports from the rest of the world but not from India.

An analysis of the Trade Potential between India and China shows that if the current cumulative aggregative growth rate of over 40% continues in the Sino-Indian trade then bilateral trade between the two countries could be three times the current target of US$ 30 billion trade by 2010.

Two areas for concern for Indian industry, which is reflected in the study, include the growing trade deficit with China and the concentration of very few products in India's export basket to China. Five products imported into India from China constitute 42% of total import from China. They are Electrical and electronics machinery (15% share), machinery and mechanical appliances (9% share), mineral fuel, oil etc (8% share), organic chemicals (7%) share and silk (3% share).

The study also provides detailed responses from Indian industry based on a survey of on various sectors in India, which are already trading with China or are looking at China for trade.

CII is, however, of the view that China provides a huge opportunity to Indian companies and given the growing interest in each other's markets and the dynamism Indian companies have shown in global markets exports to China too will reflect the true potential of Indian manufacturing and services sectors.