China President Xi's India visit: Five-Year Trade and Economic Development Plan signed

NEW DELHI: India and China signed a five-year trade and economic cooperation agreement to improve the trade balance that is loaded heavily in favour of the latter, a sore point in economic relations between the neighbours.
The agreement also envisages $20-billion Chinese investment in India. The Five-Year Trade and Economic Development Plan was signed by Commerce Minister Nirmala Sitharaman and her Chinese counterpart Gao Hucheng in the presence of Prime Minister Narendra Modi and visiting President Xi Jinping. Sitharaman and Gao also signed the minutes of the 10th session of the India-China Joint Economic Group held earlier this month in Beijing.

India had a $36.2 billion goods trade deficit in fiscal 2014 with China. This wide trade imbalance is often blamed for hurting many of the manufacturing sectors in India. The total trade between the two countries was nearly $66 billion. “It is recognised that trade deficit with China is a matter of high concern for India,” the agreement between the two countries noted, adding that New Delhi and Beijing will strive for a more balanced trade over the next five years.

One component of this would be to increase bilateral trade in services, particularly information technology and related services where India has a significant advantage. The framework proposes steps towards “improving India’s export capacity and competitiveness and expedite action on resolution of market access issues”, listing sectors that need specific attention.

India sought greater access for bovine meat, rapeseed meal and oil meals and also flagged the issue of the country’s basmati exports facing restrictions in China. China provided market access for basmati rice in 2012 but shipments have been stuck because authorities in Shanghai were not aware of the quarantine clearance given by the Chinese government for import of the aromatic grain, New Delhi has pointed out.

India exported $4.1 billion worth of bovine meat in fiscal 2014. Basmati rice accounted for $4.8 billion of the total rice exports of $7.8 billion.

India has also sought market access for five fruit and vegetables on an urgent basis. China had provided market access for mangoes in 2004 and for grapes and bitter gourd in 2005.

India also suggested lower tariffs on textiles and handmade carpets, casein and caseinates, diamonds and oil seeds. China has suggested this could be taken up under the framework of the Asia-Pacific Trade Agreement.

New Delhi suggested enhanced cooperation in pharmaceuticals where India has built up global competitiveness. Export of formulations can help China’s public health programme, New Delhi said.

“Chinese investments in India are abysmally low. Increasing investments in key sectors like infrastructure will not only bring in capital inflows but would also provide impetus to the manufacturing sector. This would help India increase its exports and lower trade deficit,” said Nisha Taneja, prof at ICRIER, a think tank.