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India-China trade to hit $30 bn by '09

FICCI asks India to diversify export basket to benefit from bilateral trade, reports Gaurav Choudhury.

india Updated: Nov 13, 2006 11:10 IST

There is a need for India to diversify its export basket to China to tap the benefits of growing bilateral trade, which is poised to reach a level of $30 billion by 2009, says a study carried out by the Federation of Indian Chambers of Commerce and Industry (FICCI).

In a paper on deepening the economic engagement between India and China, FICCI said that while India's exports to China are largely restricted to primary and resource-based products, Chinese exports to India are fairly diversified and include manufactured items as well as low and medium technology products.

India's exports to China are highly concentrated with top three items—ores, slag and ash; iron ore; and plastics—accounting for 71 per cent of the total exports.

On the other hand, India's imports from China present both resource-based and manufactured products including electrical machinery and equipment, nuclear reactors, mineral fuels and products, organic chemicals and silk.

The FICCI paper said that the restructuring of China's textile sector could result in new opportunities to increase export of cotton yarn and fabrics to China.

In addition, FICCI has identified 14 items as focus products to enhance and diversify India's exports to China.

These include automobiles (light commercial vehicles), auto engines and components, electronic components, metals and metal-based products, basic drugs, chemicals and pharmaceuticals, handicrafts, electrical machinery, textile yarns and cotton fabrics, information technology products and services, consumer durables, processed and semi-processed food items, mineral and mineral products (including iron ore), marine food, fruits and vegetables and stones and other construction materials.

"With China's entry into the World Trade Organization (WTO),immense opportunities have also opened for setting up joint ventures and business collaborations between Indian and the Chinese industry," said the FICCI paper.

Though there has not been a significant transfer of technology between the two countries, many Chinese conglomerates are looking keenly at the Indian market as part of the "go out" strategy. Major Chinese companies have set up offices in India in sectors such as machinery, metallurgical equipment, chemicals, automobiles, silk and engineering.

The presence of Indian companies in China has also increased substantially, especially in sectors such as iron and steel, automobile components, pharmaceuticals and information technology, the paper said.


First Published: Nov 12, 2006 19:23 IST