Growing trade potential calls for direct air link with China

Rupali Mukherjee

While China may soon become a preferred trade destination for India Inc, designated air carriers of both the countries are yet to explore the market potential in that country.

The air service agreement between India and China provides for operation of two frequencies per week by the national carriers of both countries. But both Air-India and Air China do not feel there is viable traffic between the two countries.

Passengers wishing to reach China either fly on a Cathay Pacific flight to Hong Kong thrice a week or on Thai Airways, which flies daily to Bangkok, and then travel further to Beijing or other destination points in China.

According to sources in the aviation sector, around 40 to 45 visa applications are processed daily in the Chinese embassy and are granted approval. Details regarding the exact number of travellers to China are, however, not available. There are indications that there are enough number of people flying to China via Hong Kong and Bangkok as there is no direct link between the two countries.

“No Chinese carrier has indicated its plan to start operations between India and the Peoples’ Republic of China, while Air-India does not have any plans at present to introduce direct services to the country,” the sources added.

China offers a host of opportunity in various sectors including automobiles, steel, information technology, software education and packaging. Certain companies have already cornered a large market share in China, including Subhash Chandra-promoted Essel Propack in laminated tubes. While NIIT has already chalked out a strategy for the Chinese market, Bajaj Auto, the Tatas and small and medium enterprises like Bry Air, too, are exploring opportunities there.

There are reports that the Haier group, China’s leading home appliance maker, is scouting for an Indian partner. Pharma major Ranbaxy Laboratories is already manufacturing antibiotics in China. Monto Motors is planning to launch a low-cost motorcycle by sourcing them from a Chinese company.

Many corporates are also toying with the idea of setting up facilities in China or going in for outsourcing of products. In addition, Indian traders are importing consumer products from China and have been visiting the country frequently to scout for suppliers and new products.

Meanwhile, the commerce ministry has commissioned studies to analyse India’s competitiveness in sectors, including textiles, leather, engineering and hardware, vis-a-vis China, Korea, Taiwan, Malaysia and Indonesia. The second study is to look at the export potential and evolve clear strategies for India.

Indo-China trade in 2000-01 has grown to $2.297 billion with imports from China at $1.468 billion and exports to China of $0.829 billion. The growth in Indian exports was at around 54 per cent against imports at 14.09 per cent. The calendar year 2001 has has recorded a positive balance of trade in India’s favour for the first time.