India and China: Agenda for Growth

Indo-China growth Agenda
India and China : Agenda for Growth

India and China's growth Agenda

It’s time we learnt when to stop envying and start competing.  That could be one of the keys to make Indo-China relations healthy, at least on the economic front. India can temporarily forget about the border issue with its Mandarin and Cantonese-speaking neighbour and give due stress on the growth agenda. The government should look at the opportunities that are ripe and not rue over the ones which are probably out of scope for the coming few years.

As Chinese President Xi Jinping and Indian Prime Minister Narendra Modi get ready for a rendezvous in Brazil in a couple of days, anticipation of a mutually beneficial outcome runs high.  Besides suggesting that the meeting would be of “strategic importance”, the observers also claim that trade and economic issues will dominate their talks. Our Commerce Minister has confirmed the fact New Delhi wants Beijing to increase its investments in India and a large chunk of FDI from China is on cards.

The meeting is touted to gain a larger attention as it’s happening at a time when discussions are resurfacing on something very obvious – High trade deficit between India and China. According to the recently released Economic Survey, the least India can do at this juncture is to increase its exports to China. The survey clearly posits that China is one of the important market destinations where India’s export potential “has not been adequately realized.” Besides mineral products, major export potential lies in mechanical appliances and chemicals based products.

If you remember Chinese Premier Li Keqiang’s visit to India in 2013, you might know that he had brought with him a coterie of businessmen who were keen on export and investment opportunities. Nothing was heard about their interest in importing Indian goods. While influx of Chinese goods in India continues, there is still substantial hurdle for Indian exports to China.

If statistics doesn’t scare you much, you can find some indications that India is not moving ahead much when it comes to penetration into Chinese market. The bilateral trade between the two nations is aggressively moving towards its goal of touching US$100 billion in 2015. While the trade value between the countries clocked $68.9 billion in 2013-14, our trade deficit with China was recorded to be $35 billion during the same period. Although the overall trade figure looks impressive, yet the deficit remains a nagging concern for India, which, according to the Indian Envoy to China, can be allayed by improving market access for Indian products in China.

Even when the Foreign Minister Sushma Swaraj met her Chinese counterpart in June, India had urged China to open up their markets to IT-enabled services, pharmaceuticals, and cotton textiles, among others. Our efforts to reduce the trade imbalance are visible. But the same is not true for China.

Given the fact that our new government (rather new Prime Minister) is doing tough talks and taking difficult decisions, there are high chances that Beijing will now be diplomatically compelled to set the expectations straight and come up with an unambiguous response.

Why not make use of this BRICS Summit?