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China stake rising in Indian market

Source : IBNS
Last Updated: Mon, Apr 29, 2013 12:25 hrs

New Delhi, Apr 29 (IBNS) Chinese stake in the growing Indian market is increasing massively and the current annual trade surplus of over USD 40 billion (about Rs 2,22,000 crore) may touch USD 44 billion by at the end of the current year, an ASSOCHAM analysis of the bilateral trade has shown.

Without suggesting for a moment that India should strain its ties with China, ASSOCHAM said, "It is in the best interest of the two neighbourly countries that their relations improve and are cemented through expanding commercial engagement."



ASSOCHAM said it is looking forward to the visit of Chinese Premier Li Keqiang next month and is confident that the two countries would be able to resolve their strategic differences, including that of the border.

The chamber said, against its mammoth imports of USD 50 billion from China alone, India's exports of merchandise goods were far short at USD 12.41 billion during April-February, 2012-13 (the latest disaggregated data) to that country.

For the fiscal 2012-13 as a whole while imports from China may well exceed USD 57 billion while India's exports to that country may not exceed USD 14 billion.

The trend in the financial year of 2012-13 has more or less followed that of the previous fiscal when China ran a trade surplus of USD 40 billion despite repeated concerns raised by the Indians at the highest level.

"At a time when Chinese economy, like most other economies of the world, is slowing, its exports to India would be of vital interest to the Chinese dispensation. In a way, the economic engagement is the best way to bridge all other differences. China alone accounts for over 11 per cent of India's total imports making it a high stake commercial interest for the neighbouring country," ASSOCHAM commented.

Electronics, machinery, precious pearls and other commodities are the principal items of import from China. In the last fiscal (11 months for which disaggregated data is available), of the total imports of USD 141 billion of five top items of imports , China alone accounted for USD 22.80 billion.

When it comes to exports, main items which are shipped to China are petroleum products, transport equipment, machinery and drugs and pharmaceuticals.

In the fiscal 2012-13, the exports to China are estimated to have been lower than that in the previous fiscal.

A large trade imbalance has been a matter of concern and should again be raised at the highest level with the Chinese leadership. The Indian exports of several items, especially drugs and pharmaceuticals face trade barriers in China.

A large-scale dumping of Chinese goods has hurt interest of the Indian businessmen and manufacturers in their own markets. Most of the damage has been done to the small and medium enterprises which find it difficult to compete with the economies of scale from aggressive exporters. Be it toys, worship idols, lightings, tubes, the Chinese goods are all there.

In the recent past, the Chinese commercial aggression has not limited itself to small and medium scale items, but to heavy engineering. The home-grown PSU and private firms such as BHEL and L&T have suffered a lot at the hands of Chinese power equipment manufacturers. The story is somewhat similar in the telecom gear.

"Net-net, it is more in the interest of the Chinese to stay commercially engaged maintaining the best of strategic and political relations as well," ASSOCHAM said.

India, on the other hand, always respects its ties with the neighbouring countries, it added.

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