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 India to look east for business prospects |
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ATUL DALAKOTI |
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While most countries of the world are facing economic slowdowns, India and China continue to surge ahead and cement their roles as Asia's economic powers.
Although bilateral trade in 2002 increased by 37.6 per cent according to Chinese Customs statistics, trade volume remained at US$4.9 billion.
While India has emerged among China's top 20 trading partners, China's trade with India accounts for only 0.8 per cent of its total foreign trade between 2001 and 2002.
However, the share of China in India's foreign trade in the same period was around three per cent.
During his visit to India in January 2002, former Chinese Premier Zhu Rongji proposed to enhance bilateral trade between the countries to US$10 billion.
Under the leadership of the Federation of Indian Chambers of Commerce and Industry (FICCI) and China Council for the Promotion of International Trade (CCPIT) and their unique institutional arrangement of Joint Business Councils, India-China bilateral trade and business collaborations have reached new heights.
The efforts of CCPIT chairman Wan Jifei and FICCI president A.C. Muthiah have yielded positive results.
In his last visit to India, Wan agreed to enhance bilateral commercial co-operation.
And to better facilitate business travel and reduce tie-ups between the two countries, FICCI and CCPIT have jointly prepared the India-China Business Guidebook, which will be released during the Indian Prime Minister's visit to China.
FICCI's preliminary analysis shows that India-China bilateral trade has the potential to expand to US$10 billion by 2006 and 2007 if bilateral trade continues to flourish at a compound average growth rate of 30 per cent.
Over the last few years, Indian exports to China were mainly iron ore, plastic and linoleum, marine products, cotton yarn and fabrics, organic and inorganic chemicals, and drugs and pharmaceuticals.
The export basket has not changed much although some new products have emerged with a strong potential to develop in the future.
However, Indian industry analysts express concern that the top five categories of the country's exports to China have not shown any increase in trade percentages.
Iron ore, other ores and minerals, plastic and linoleum, marine products and drugs and pharmaceuticals, which constitute 65.98 per cent of India's total exports to China, have not seen any significant growth.
Further, exports are concentrated on primary products while higher value-added manufactured items have yet to make their presence.
Indian exporters believe that bilateral trade will surge once issues related to market access, banking channels, registration procedures and standards are resolved.
Another reason often cited by Indian companies for the slower growth rate of exports to China involves the difficulties in identifying reliable potential clients as well as legal bottlenecks.
Experts also suggest that direct transport links between the two countries should be strengthened, particularly direct shipping links with reductions in freight costs.
Indian companies can target entry points such as Shanghai and Qinhuangdao to enter the Chinese market.
But on the whole, there remain endless opportunities for cementing trade and commercial ties between India and China.
In a recent survey conducted by FICCI, Indian companies singled out specific products that hold export potential to China.
These include specialty chemicals, automotive engines and components, light commercial vehicles, medical diagnostic products, yarn and polyester staple fibres, steel, marine and processed food items, soybean meal, chemicals, pharmaceuticals, software and engineering goods.
It is worthwhile to note that visiting Chinese delegations have also shown keen interest in importing most of the above items in addition to seeking partnerships in the areas of biotechnology, high-tech textiles, fibres, stainless steel and electronics.
Besides, Indian exporters stand to gain from the reduction in Chinese tariffs following the country's accession to the World Trade Organization.
One sector that can potentially benefit the most from the reduction is the food-processing sector, where Indian exporters can target China with niche products such as mangoes, grapes, pomegranates and apples.
In fact, India and China have reached a consensus on the Bangkok Agreement in February 2003, under which China agreed to provide tariff concessions to 217 items for Indian exports at an average tariff reduction of 13.5 per cent.
Such frameworks are expected to have long-term implications on India's exports to China.
Other sectors that hold considerable promise for bilateral trade are steel, textiles, plastics, leather, gems and jewellery, stones and organic chemicals.
Another sector with tremendous opportunities for forging synergies with Chinese companies are China's small and medium-sized enterprises.
Under the Torch-and-Spark (xinghuo) Programme of the Ministry of Science and Technology of China, which focuses on integrated technology improvement, research and training, Indian companies can make technological exchanges with China to improve rural productivity. They can also establish projects in areas of biotechnology, energy saving and environment-friendly technologies as part of the programme.
There is a growing demand in China in biotech, software, auto components and high-tech textiles. Indian companies would certainly find it profitable to export such high-end products to China.
A FICCI study also reveals that the Boao Forum for Asia will be a unique platform to voice the concerns of Asian countries and will benefit India as well as China in the long run.
FICCI is an initial member of the Boao Forum. China can greatly enhance its commercial co-operation with India through the forum.
Indian and Chinese industry can form profitable win-win partnerships which will result in a prosperous Asia. |
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