New Delhi’s worried about India’s China trade imbalance
August 19, 2010

Last year the trade imbalance between India and China weighted US$16 billion in China’s favour, this year with telecom and power equipment upheavals, coal, cotton and iron ore trade barriers up, India’s trade deficit has grown manifold. While numbers have not yet been crunched, Indian diplomats are worried their dreams of a bilateral trade target of US$60 billion will be crushed if Indian exports to China don’t pick up soon. China-India bilateral trade in the first half of 2010 rose to US$32 billion, from US$43 billion last year.

To diagnose the problem, seek new business ties and build stronger bonds with Chinese companies, Indian Minister of State for Commerce and Industry Jyotiraditya Scindia is in China leading a delegation of 350 businessmen from 70 companies in sectors ranging from information technology and machinery to pharmaceuticals and agro-products. The delegation which has travelled from India, China and other parts of Asia for this meeting will hold business-to-business meetings with some of China’s biggest firms today. Yesterday, the delegation celebrated India’s national day at the Indian Pavilion at Shanghai World Expo which is on until October 31 this year.

On account of the slowdown in the European and American markets, conglomerates are looking towards expanding market share and exporting more to Asia, including the billion plus markets of India and China, while cutting down on imports. This is expected to adversely affect both China and India, however, India which has a large fiscal deficit is more worried about its shrinking export markets and as a result is looking at pushing its products within the Asian and African regions. While China has agreed to import more from India, and expand the basket of traded goods to include manufactured equipment and agricultural products, it will be a while before the yawning trade gap can simmer down. In the meanwhile, until new avenues are explored and encouraged, India will have to re-allow domestic companies to export basic commodities. New Delhi is already keen to re start the measured export of cotton sans tax from October. Hopefully, coal and iron ore will follow suit.


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