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Working out Wen and how

The Sino-Indian trust deficit will take care of itself if we can get the trade talks right.

india Updated: Dec 14, 2010 22:43 IST

India's engagement with China is superimposed with a number: $50 billion. That's the value of merchandise we sell to and buy from our single-largest trading partner this year. The heads of governments of the five permanent members of the United Nations Security Council will have visited New Delhi before the year runs out. All of them are looking for greater access to the market. What makes Chinese Premier Wen Jiabao's trip to India this week stand out is the same trade statistic. India's merchandise trade with the US, Britain, France and Russia combined add up to just a shade over what we have with China. Impressive business delegations have accompanied Barack Obama and David Cameron, but when the Wen circus rolls into town with 100 of China's top tycoons, the red carpet needs to be a bit longer.

Commerce between Asia's biggest neighbours has flourished without too much nurturing by either Beijing or New Delhi. Five years ago, two-way trade was a mere $18 billion. At this prodigious rate of growth it could double in another five years to $100 billion. But unless India gets its act together, the scales will tilt heavier on the Chinese side: we import $3 dollars worth of goods for every dollar's worth we send across the wall. The Chinese manufactures finding their way into India make up an awesome amount if we take oil out of the picture — energy constitutes roughly half our imports. The two energy-deficient economies will have to work out a mechanism that eases the imbalances in their non-oil trade. Beijing has signaled it is willing to discuss the issue, New Delhi needs to bargain hard for greater access to service exports where India is relatively more competitive.

The pattern of trade so far is to be expected if you live next to the world's factory, and when back office skills are not very much in demand on the shop floor. Yet it cannot be ignored if India is serious about its manufacturing prowess. No country has developed without an industrial revolution. China is undergoing its, but that should not be at the cost of India's makeover into a modern economy. Emerging from roughly similar economic structures at the end of the 20th century, the two countries can evolve a symbiotic relationship that assists in each other's development. The time is now to put our ties at a level that achieves this synergy. Let trade do the talking, other issues that add to the trust deficit will hopefully get addressed on the way.