Krishna to take up growing trade deficit with China.

New Delhi: New Delhi would seek greater access of Indian goods to Chinese markets with its trade deficit going up to $15.8 billion last year, when foreign minister SM Krishna visits China from Monday.

Senior officials in the ministry of external affairs told FE, “From a figure of a mere $1.8 billion in 2000, our trade has risen despite global economic slowdown to over 43 billion dollars in 2009. And, in the first two months of 2010 the bilateral trade has grown at over 50% compared with the same period last year. Both countries have a trade target of $ 60 billion, by the end of 2010 which both sides should be in a position to achieve.”

However, “at the same time, the growing trade imbalance is an issue which needs to be addressed. In 2009, India saw a trade deficit of $15.8 billion s as compared with $11.17 billion in 2008. We will have constructive discussions with our Chinese friends on greater market access to Indian commodities and easing of other hurdles including non-tariff barriers,” officials added. Chinese companies have been very active in bidding for undertaking and executing infrastructure development projects in India. Projects worth $25 billion dollars were secured by the Chinese companies in areas like highways, metro, steel plants, especially in the power sector, in 2009-end. Of the total, a number of projects have been implemented and others are in the process of being implemented.

“A mechanism called India-China Joint Economic Group headed by the commerce and industry minister of India and his Chinese counterpart is in place to deal with trade deficit issues. In fact, this group met in mid-January where commerce minister Anand Sharma took up the issue of imbalances in trade. It was also brought to the notice of Chinese Prime Minister Wen Jiabao along with the commerce minister,” explained officials. The Chinese side has voiced its readiness to accelerate talks with India aimed at negotiating a bilateral trade agreement in a bid to balance trade between the two Asian giants, according to MEA officials said.

Ficci officials told FE, “Interestingly, China’s share in India’s overall imports and exports have been rising rapidly over the past ten years. The burgeoning gap between import share and export share since 1998-99 has gradually been phased out in 2004-05. But this gap of export and import share once again has been amplified considerably after 2004-05 as Indian exports to China failed to keep pace with imports from China in recent period.” “The recent set back in India’s overall trade with China and the incidence of greater fluctuations in India’s export growth could lead to some general observations from India-China trade. It can be argued that several constraints imposed on India in exporting to China act as the barrier to even growth of India’s export to China. Tariffs in China are much lower than those in India particularly for India's major export items

Source : Financial Express