The low trade between India and China is a matter of concern for both the countries and will be raised when the three joint working groups on trade, services and investment meet in February to discuss issues affecting bilateral trade and investment.
Market access for Indian firms in China is a concern for the government, though both sides are confident of touching the $100-billion trade target by 2015 due to a course correction by the strategic economic dialogue initiated with China.
India’s exports to China after 11 months of 2012 amounted to $17.50 billion, declining by 16%. Overall, bilateral trade reached $61 billion, down by more than 9%, as compared to the first 11 months of 2011.
The deficit has widened over the last two fiscals due to lower import of iron ore and copper, which account for almost half of India’s exports to China.
“As a corrective measure, India has offered a large range of products from drugs to diamonds, seafood, and agricultural produce like rice and beef, textiles and light engineering goods to China to balance massive imports of manufactured goods from there,” said officials.
While India has presented a list of 916 items that could be sourced from here, New Delhi wants greater access to its value-added products and wants Beijing to increase government procurement in sectors such as pharmaceuticals.
In December, the trade imbalance with China stood at $23 billion. Interestingly, the top Chinese leadership was aware of India’s concerns and the Chinese Development Bank had stepped in to invest and off-set some of the deficit.