Progress on Regional Trade Agreement (RTA) between India and China is unlikely during External Affairs Minister S M Krishna's visit to Beijing beginning on Monday, until Beijing addresses New Delhi's concern of rising trade deficit, which touched $ 16 billion last year, sources said.
Reacting to reports quoting Chinese officials offering to accelerate talks to finalise a bilateral agreement, with trade between the two countries expected to touch $ 60 billion, Indian officials said the RTA was under discussion for some time but progress on it during Krishna's visit was unlikely as India is very concerned about the trade gap.
"We touched $ 11 billion trade deficit in 2008 and it grew up to $ 16 billion last year. We need to find a way out. Until then it is not politically feasible for India to go for RTA," highly placed Indian diplomatic sources told PTI here today.
"The ball is in China's court. Drastic reduction in trade deficit could make it easier for India to go for RTA," they said.
The trade deficit started growing only in 2006 after China started exporting heavy machinery, telecom equipment and home appliances to India.
China, which is pressing for the trade pact, agreed to address India's concerns during Commerce Minister Anand Sharma's visit here few months ago.
As a follow up, the first attempt to push trade in a big way was made this month by India when it held the first 'IT summit' here, in which over 300 Chinese companies, including those that are state-owned took part.
Currently, about 12 top Indian IT companies are present in China catering for offshore markets and multinationals.
India believes that trade with China, which is largely made up of raw materials like iron ore, could pick up if IT companies get into Chinese domestic markets unhindered.
Besides IT, India also plans major campaigns to promote engineering services, pharmaceuticals and agro products in next seven months in different Chinese cities.
Currently, about 70 per cent of India's exports to China are made up of raw materials like iron ore, which come back to the country as higher valued finished goods, posing major competition to India's small and medium-sized businesses.
Bilateral trade between the two countries touched $ 52 billion in 2008, but dropped to $ 44 billion last year due to the global downturn.
"The aim this year is to touch $ 60 billion and India would like to see far less trade deficit," they said.
Trade growth in the first two months of 2010 has shown 55 per cent increase compared to the same period previous year. In those two months, Indian exports touched $ 3.49 billion against China's $ 5.49 billion.