China’s domestic demand push boon for Indian exporters.

India needs to sharpen its export strategy for the Chinese market, with the country fast emerging as a major global economic driver even as giants like the US and Europe struggle to recover from the recession. Addressing the visa issue for Chinese workers would go a long way towards building mutual confidence and expanding access for Indian exporters in the Chinese market.

With China now focusing on creating domestic demand, in a marked shift from its traditional dependence on export-led growth, will offer an opportunity for Indian companies to capture the unexplored Chinese market.

“The time is ripe for Indian companies to explore and capture the Chinese market as the dragon focuses on creating domestic demand in a change of its traditional export-led economic growth strategy post-recession,” says Anil Bhardwaj, secretary-general, Fisme, a trade body representing small and medium-size enterprises.

Chinese banks had shown interest in financing infrastructure projects in India. With the Indian government envisaging a $1-trillion investment in the infrastructure sector in the 12th Five Year Plan, this offers a big business opportunity for Chinese banks. The Indian infrastructure sector, especially power is facing a serious fund shortage. Availability of cheaper Chinese financing could help infrastructure projects here facing fund crunch.

China is India’s largest trading partner, with bilateral trade expected to cross $60 billion this year. India-China bilateral trade volume stood at $42.42 billion in the financial year 2009-10. However, trade balance is heavily tilted in favour of China, with India unable to diversify its basket of exports to China.

India’s trade deficit with China, which was just $1 billion in 2001-02, rose to $16 billion in 2007-08 and is further expected to go up to $24-25 billion this year. The rising trade deficit remains a sore point in India-China bilateral trade relations. However, this should not be a worrying factor for Indian policymakers given the keenness China has shown for investments in India in recent months.

For example, Chinese state-owned banks were earlier not keen to finance power projects in India. But now they seem to have changed their mind. In a first for any Indian company, Reliance Power has tied up a Rs 5,000 crore financing for its 4,000 mw Sasan ultra mega power project from Chinese banks for procurement of equipment from Shanghai Electric Corporation.

Indian companies have to import from somewhere products which are not manufactured in India. China is an attractive import market for Indian companies for its cost-competitiveness.

Source : www.financialexpress.com