Hurdles to free trade with China.

New Delhi, Dec. 13: China and India will consider a free trade agreement during Chinese Premier Wen Jiabao’s visit from Wednesday, but officials say resistance from industry associations may affect the talks.

China’s ambassador to India Zhang Yang told reporters here, “It is our hope that we can start the process (talks on FTA).We are very much positive.”

However, senior Indian commerce ministry officials said while India would be willing to talk “it is difficult to see this happening. The Prime Minister has been pushing us and we have gone ahead with FTAs (free trade agreements) with Asean, Japan and the EU despite pressure from chambers. But this one we know could really kill Indian industry”.

China has emerged as India's biggest trade partner — with two-way trade estimated at $60 billion a year, a 30-fold increase since 2000 — but the balance of trade is heavily tilted in China’s favour.

India’s trade deficit with China is a huge $19 billion, mainly because China exports manufactured goods and buys mostly raw material such as ores, slag, ash, iron pellets and steel.

“Any free trade deal with China will be one-sided. With their non-transparent pricing structures we will see too many industries outpriced and finished off with a tariff wall to protect them,” said officials.

Worried about this, India initiated the highest number of anti-dumping complaints with the World Trade Organisation against China last year.

Ficci found that cheap imports from China had made deep inroads into sectors such as electronic goods, machinery and auto components.

Industrialists openly complain of how the Chinese had “killed off” certain industries, including the local toy businesses and many battery makers.

When it comes to India trying to sell manufactures to China, associations complain of non-tariff barriers.

Ficci estimates tariff and non-tariff barriers add up to 39 per cent of power equipment which India can sell to China.

Even Bollywood has complaints against Chinese non-tariff barriers. Beijing has a quota that allows just about 30-40 foreign films every year. Though Indian cinema gets the most orders from this quota, it still keeps large numbers of Mumbai releases out of Chinese movie halls.

Says Manish Arora, an independent trade analyst, “Bollywood movies are consequently sold as pirated DVDs in China, giving us low revenue gains.”

Some Indian companies are keen on more trade with China.

It may be recalled, some private power and telecom utilities had recently lobbied successfully to lift an informal ban on Chinese power and telecom gear. The ban was in place after Indian intelligence agencies flagged possible spying bugs coming with the imported equipment.

India will be signing some $20 billion worth of business deals during Wen’s visit, including Reliance Power’s purchase of generators and other power plant equipment worth $8.3 billion from Shanghai Electric.

Wen will be bringing the largest ever Chinese trade delegation with him when he arrives on Wednesday.


Source : telegraphindia.com