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  1. India turning to services to bridge widening trade deficit with China

India turning to services to bridge widening trade deficit with China

Outdone by China in the manufacturing sector, India is turning to the services sector to bridge the growing trade deficit between the two nations.

By: | New Delhi | Updated: March 16, 2015 11:37 AM
China, manufacturing sector, India, trade deficit, ministry of commerce and industry, information technology, pharmaceuticals, textiles, agricultural products, Beijing, Tourism Outdone by China in the manufacturing sector, India is turning to the services sector to bridge the growing trade deficit between the two nations. (Reuters)

Outdone by China in the manufacturing sector, India is turning to the services sector to bridge the growing trade deficit between the two nations. There are five services that the ministry of commerce and industry plans to focus on with regards to China — information technology, pharmaceuticals, textiles, agricultural products and tourism.

New Delhi has also sought to form a joint working group with Beijing to discuss the growth of these services in the country.

“This will be a ministerial-level joint working group and will outline the strategy to market Indian services in China. The group will meet soon,” a senior official told The Indian Express. While the Chinese exports traditionally comprised of labour-intensive products and is now moving towards high-technology products, there is a gap in the country’s exports from the services sector. “It is this vacuum that India is seeking to fill,” the official added.

The official said that India can especially play a vital role in the tourism and the pharmaceutical sectors.

“Tourism is a sector with high potential given the fact that around 100 million Chinese tourists go across to countries like the US and Europe. According to 2013-14 figures, the Chinese people spent $130 billion on tourism activities. India hardly gets a share of these tourists. We are working on stepping up the measures to promote India as a favoured tourist destination amongst Chinese,” the official said.

The tourism ministry is already in talks with the commerce department to develop a Hiuen Tsang circuit between India and China, tracing and developing the places where the Chinese scholar travelled and studied during his over 17-year long land journey to India.

For 2013-14, the trade deficit between India and China was tilted in China’s favour at $36.2 billion. While India exported goods worth $14.8 billion, its imports stood at $51 billion.

Further, in the pharmaceutical sector, the official said that China largely supplies raw materials while it has no significant production brand in generic products and under these circumstances, it can become a high export market for India.

According to a study commissioned by the Reserve Bank of India in 2012, China is very poorly placed in comparison with India in the pharma sector due to a “differentiated policy regime and management skills”. The study said that there is no Chinese product line or new chemical product that has been certified by the Food and Drug Administration of the US.

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