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The Indian and Chinese governments agreed today to scale up two-way trade to $100 billion by 2015 from $67.8 bn in 2012-13.
Bilateral trade went from $2.1 bn in 2001-02 to $75.6 bn in 2011-12; it then came down to $67.8 bn during 2012-13. Simultaneously, India’s trade deficit increased from $1.1 bn in 2001-02 to $40.8 bn in 2012-13. In 2012-13, China became India’s fourth largest trading partner from third largest in 2011-2012. Our exports fell from $18.1 bn in 2011-12 to $13.5 bn in 2012-13.
The surging deficit is a big cause of concern and Commerce and Industry Minister Anand Sharma took up the matter with Chinese counterpart Gao Hucheng. Sharma today urged greater work on some of the steps suggested in the earlier communiqué issued by the Premiers of the two governments, to allow our exports to increase.
In 2010, both sides had set a trade turnover target of $60 bn, which was achieved. However, India was not able increase its exports to China, while imports from there kept rising. The only exception was in 2012-13, when imports from China fell to $54.3 bn from $57.5 bn in FY2012.
The joint communiqué issued then had suggested measures for India to increase its exports, including enhancing exchange and cooperation in pharmaceutical products, stronger relationships between information technology (IT) companies, and speedier completion of phyto-sanitary negotiations on agro products.
“Targets do get achieved but that always happens in their (China’s) favour,” said Biswajit Dhar of Delhi-based think tank RIS. “This is now an opportunity for us to pull up our socks and look at the Chinese market seriously, and understand areas where they need us. We must realise that China is gradually becoming a high-cost economy, and there are labour and wage issues that are affecting their market. Indian industry has to stop being defensive and work out a well-thought strategy.”
According to exporters, increasing of market access to China is vital for a jump in India’s exports as the country endeavours to change its export profile from raw materials to finished and value-added products.
“While bilateral trade of $100 bn by 2015 is within the realm of reality, I would like India’s exports to touch $40 bn by 2015, so as to bring the trade deficit within a narrow zone,” said M Rafeeque Ahmed, president, Federation of Indian Export Organisations.
An India-China CEOs’ Forum has been constituted to deliberate on business issues and make recommendations on expansion of trade and investment cooperation. The India side would be chaired by Anil Ambani, chairman, Reliance ADAG Group. Chen Yuan, chairman of the China Development Bank will head the other side.
For five years, India had been making efforts to enter the Chinese IT and pharmaceuticals sectors. However, Indian IT faces problems in work permits and business tax regulations. In pharma, too, Indian industry faces several barriers in the form of delay in approvals and a complex registration process.
To address the trade deficit issue, both sides today signed three agreements, on buffalo meat, fisheries and pharmaceuticals, and one agreement on feed and feed ingredients. The export of buffalo meat had not been allowed from India to China and this has been a long-pending issue. With the resumption, India hopes a big merchandise flow would be helpful in reducing trade imbalance.
IMPORTANT PACTS SIGNED
- MoU on buffalo meat, fishery products and agreement on feed and feed ingredients between agricultural and processed food products
- MoU on co-operation in the field of sewage treatment
- MoU on cooperation in mutual translation and publication of 25 classic and contemporary works
- MoU upon provision of hydrological information of the Yaluzangbu/Brahmaputra river in flood season by China to India
