With India making it clear that it cannot for ever be a just market for Chinese goods without broader economic ties, the government think-tanks of both countries have signed several initial pacts to increase Chinese investment in India’s proposed coastal manufacturing zones, high speed rail networks, clean energy, urban development as well as ensure greater access to Indian IT firms in China.
The cooperation agreements were signed between NITI Aayog and its Chinese counterpart National Development and Reform Commission during the 4th India-China strategic economic dialogue held during October 6-7 in New Delhi.
India has been concerned that it ran close to $53 billion trade deficit with China in FY16, as cheaper Chinese goods stunted India’s manufacturing industry. Despite getting such a huge Indian market, Chinese investment in India was a paltry $1.3 billion in 15 years through 2015.
Aayog vice-chairman Arvind Panagariya said India needs to learn from China and develop coastal economic zones as China has done in Shenzhen. He wants India to replicate the Chinese model of port-led manufacturing to transform Indian economy from $ 2 trillion in FY16 to possibly $10 trillion in next one-and-half a decade.
With China promoting out-bound investment and India seeking foreign capital and technology, it could enable India to take advantage of the synergies and put in place a vigorous framework to strengthen bilateral investment relationships.
“Both sides agreed to adopt new theme of closer cooperation on coastal manufacturing zone development between the two sides during the next one year and encouraged enterprises of the two sides to grasp opportunities and seek early harvest projects in manufacturing and industrial area like infrastructure, automobile, energy and electronics,” Panagariya said.
With India aiming to increase share of manufacturing in GDP from 16% now to 25% by 2025, it is giving special stress on Chinese companies to set up manufacturing units in the country as it is not feasible for India to remain only a client country. Recently, some Chinese firms such as Huawei and Xiaomi have set up smart phone manufacturing units in India.
In the field of railways, China Railway Eryuan Engineering Group has officially delivered the interim final feasibility study report on the Chennai-Bangalore-Mysore railway upgrade project to Indian High-speed Railway company.
The two sides would now about implementing the project.China Railway Siyuan Survey and Design Company has also submitted a report on the feasibility in Delhi-Nagpur high-speed railways.
In IT, a China-India technology park is being set up in Hainan province that has the potential opportunities for about 2,000 high-skilled Indian professionals, Panagariya said. Both sides will explore greater cooperation in digital India and internet plus programme.
The next strategic economic dialogue would happen in Beijing next year.