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DIVERSIFY
TRADE BASKET TO ACHIEVE US$ 20 BN BILATERAL TRADE WITH CHINA: CII
Ahead
of the high-profile visit of Chinese Premier Wen Jiabao to India,
the Confederation of Indian Industry (CII) has called for diversification
of export basket to attain the desired US$ 20 billion trade between
India and China by 2010. According to a study prepared by CII, special
focus on investments and trade in services and knowledge based sectors,
besides traditional manufacturing sector must be given, in view
of the dynamic comparative advantage of India. The bilateral trade
between the two countries reached US$ 13.6 billion in 2004 compared
to US$ 7.6 billion in 2003, from a low base of US$ 338 billion in
1992. The CII study has asserted that diversification of trade basket
would impact the volume of trade as well as result in qualitative
shifts.
The CII study has pointed out that
Indian companies could enter the Chinese domestic market of US$
615 billion by using China as a production base. Potential sectors
and markets could be identified for investment for short term, medium
term and long term returns, the paper added.
According to CII, trade in services
is an important form of trade to enhance comprehensive bilateral
trade and economic cooperation. The emergence of India as one of
the fastest growing economies in the world, to a great extent, could
be attributed to the rapid growth of its services sector at an average
annual rate of 9% during the 1990s.
The study has pointed out that services
and knowledge trade between India and China has significant potential
for growth in areas like Biotechnology, IT and ITeS, Health, Education,
Tourism, Financial Sector.
There is also an urgent need to shift
the focus from primary exports to the export of high value added
products, according to the CII study. The study has identified products
in different categories to enhance export to China. Marine products,
Oil seeds and Olea, salt, inorganic chemicals, organic chemicals,
tanning/dyeing extracts, plastic and plastic articles, rubber and
rubber articles, electrical machinery, engineering goods and machine
tools, optical and medical equipment, dairy products, as some of
the products.
Further, in order to achieve greater
volume and diversification in trade basket with China, the CII study
has suggested that it would be important to conduct market research
on the price, pattern, tariffs and source of the imported products
by China and identification of ‘niche’ products. It has also recommended
that it would be imperative to set up branches or representative
offices in China to showcase products and liaison with the provincial
and central governments in China and Chinese business community
to keep abreast of Chinese policies.
It has also called for liaisoning
with major multinational manufacturers with investment in China
to know their specifications and imports requirement for their operations
in China or other parts of the world. Another important aspect to
showcase Indian products would be participate in trade fairs in
China to display products and material applications and establish
one-to-one relationships.
The CII study has pointed out that
Iron ore constitutes about 53% of India’s total exports to China.
India is the largest exporter of this commodity to China in value
terms. India is the largest exporter of this commodity to China
in value terms. Iron and Steel exports have shown a declining trend
as they dropped by about 46% compared to the same period last year.
China’s exports to India are dominated
by value added items, especially machinery and electrical machinery,
which together constitute about 36% of total Chinese exports. According
to the CII study, the top 15 Chinese exports to India have recorded
growth between 29% (organic chemicals) and 219.89% (iron and steel).
Border trades, though small in volume,
also play a significant role in enhancing bilateral trade and economic
cooperation, said the CII study. It also contributes to generate
opportunities for the export of commodities across the bordering
provinces and states of the two countries.
NEW DELHI
11 April 2005
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