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    India seeks to lower trade deficit with China, asks for more access in pharma and IT/ITeS sectors

    Synopsis

    India has asked China to make policy changes to give Indian exporters more access to its market to reduce the growing trade imbalance between the two countries.

    China's trade minister Chen Deming has said a joint working group of senior officials will look into the proposals, which were handed over to him during his recent India visit.

    NEW DELHI: India has asked China to make policy changes to give Indian exporters more access to its market, the latest in a series of moves to nudge the Asian powerhouse to reduce the growing trade imbalance between the two countries.

    The proposals, made in two informal papers, include suggestions for simplification of certification and registration norms, lowering of taxes and a more liberal visa regime, besides hint at a tit-for-tat move if China does not act on its promise to increase imports.

    "With China's economy slowing down and growing global uncertainty making investments in the West risky, the country wants closer economic cooperation with India," an official told ET, adding, "We are making it clear that unless they take steps to increase imports from India, we are not going to do much to encourage their industry."

    China's trade minister Chen Deming has said a joint working group of senior officials will look into the proposals, which were handed over to him during his recent India visit.

    India's trade deficit with China in 2011-12 touched almost $40 billion, which is more than a fifth of India's total trade deficit and reinforces concerns about the country's over-dependence on its neighbour.

    The official said, "Since the joint working group is supposed to give its first report in three months, we are hopeful that this time we will get something substantial out of them (China)."

    Minister of state for commerce and industry Jyotiraditya Scindia admitted in Parliament on Thursday that steps taken to restrict negative balance of trade with China had not succeeded as per expectations.

    "If China acts on our two informal papers, our exports to the country could go up significantly," the official quoted earlier said.

    The paper on IT and IT enabled services (ITeS) identifies lack of domestic business in China as the biggest challenge for Indian companies. Another stumbling block, it says, is the stringent certification requirement to bid for government tenders and government-sponsored IT projects.

    India has proposed that the Chinese government give instructions to its state-owned companies to start doing business with Indian companies and also levy the lowest applicable tax on the industry.

    It has also suggested that qualified technical engineers and software professionals be given business visas and work permits valid for three years to facilitate movement.

    In the area of pharmaceuticals, the paper notes that despite India being the market leader in generics, its exports to China have stagnated due to trade barriers.

    The paper says that the drug registration process of the Chinese State Food and Drug Administration, China's drug regulator, should be simplified and registration granted sooner. The regulator should provide a green channel to Indian companies whose facilities have already received necessary approvals and accreditation by drug regulatory authorities in the EU and the US, it adds.

    Another suggestion is that China should encourage procurement practices that are non-discriminatory, merit-based and transparent, which would allow Indian firms to compete on an equal footing.

    The JWG is likely to be set up soon, after India and China exchanged minutes of the joint economic group meeting held in New Delhi earlier this week.
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