India devising trade deal to boost exports to China

India wants China to scrap levies on items including uncombed single cotton apart from castor oil, menthol, granite, diamonds and glass envelopes for picture tubes when negotiations for expansion come up in April 2019.

India is devising a plan to boost shipments of around 200 products to China and narrow the deficit with its biggest trading partner, a person with knowledge of the matter said.

A gantry cranes loads a shipping container onto a truck from a ship docked at the Jawaharlal Nehru Port in Navi Mumbai.(Bloomberg File)

The plan includes seeking duty waiver on a raft of products under the Asia Pacific Trade Agreement, the person said, asking not to be identified as the talks are still on. New Delhi wants China to scrap levies on items including uncombed single cotton apart from castor oil, menthol, granite, diamonds and glass envelopes for picture tubes when negotiations for expansion come up in April 2019.

An analysis by Prime Minister Narendra Modi’s administration shows that Southeast Asian nations, Australia, and South Korea among others have competitive advantage over India due to free trade agreements with China. In marine products, especially frozen shrimps and prawns, India loses its competitive advantage due to tariffs while shipments from the Association of Southeast Asian Nations are allowed duty free.

APTA, established in 1975, seeks to create a liberal trading regime between Bangladesh, India, Laos, Korea and Sri Lanka and China. Apart from seeking tariff concessions, the ongoing US and China trade conflict also presents an opportunity to cut down the $56-billion trade gap it runs with China, the person said.

Export competitiveness

India’s Commerce ministry spokeswoman didn’t immediately respond to two phone calls to her mobile phone. China’s Ministry of Commerce didn’t immediately respond to a fax, seeking comments.

But trade experts feel that it is not tariff concession alone that will help India, which lags many of its southeast Asian peers in competitiveness. Also, India shouldn’t lose focus on other trade pacts that are being negotiated including the Regional Comprehensive Economic Partnership in its bid to boost exports to China.

“While APTA may be a good idea to pursue, RCEP is a complete package as it would give access to Japan, Australia and other markets too apart from China,” Amitendu Palit, a senior research fellow at the Institute of South Asian Studies, National University of Singapore, said by phone. “Difference in competitiveness level and non-tariff barriers imposed by China is a major problem for India.”

India has dragged its feet as RCEP doesn’t provide for free movement of skilled workers, a key concern for New Delhi given its large pool of tech workers, even as it opens its market to a clutch of nations known for their manufacturing prowess. It is facing pressure from member nations -- including Japan, China, Australia, New Zealand and South Korea -- to conclude talks by end of 2019.