Addressing the deficit

The Sino-Indian economic partnership has been a stabilising force Delhi and Beijing must build on

The shadow of the PLA's Ladakh incursion may have come in the way of Chinese Premier Li Keqiang's visit elevating the Sino-Indian bilateral relationship to a higher level. But even as New Delhi's welcome candour in talking to the Chinese saw the boundary dispute being underscored, the bilateral economic relationship, which has broadened and deepened Sino-Indian engagement and lent it the much-needed stability, has had troubles of its own. Primary among these is the trade imbalance, which stands at approximately $30 billion, to India's disadvantage. The second is the lack of access for Indian companies in China.

The Chinese premier acknowledged the problem and has promised that China would help Indian products and businesses gain access to its market, even as Beijing supported Chinese enterprises in stepping up investment in India. Although bilateral trade in 2012, on the whole, declined from $74 billion in 2011 to $66 billion, India's trade deficit has shot up significantly — from $19 billion in 2009-10. The target trade turnover remains $100 billion by 2015. The agreement on pursuing the regional trade agreement, the setting up of three working groups under the Joint Economic Group, and the promise of mutual help in developing industrial zones, are steps in the right direction. The India-China CEOs forum, which has had its first meet during Li's visit, was itself a capital idea, since an economic partnership as big as this one cannot be left to political summitry alone.

India Inc has struggled to make headway in China, so much so that even in the electronics and IT sector, where India and China collaborate most, top-tier Indian IT companies earn less than 2 per cent of their total revenue from China. Meanwhile, Indian pharma companies, concerned about the quality of drugs from China, have been looking to curb their API procurement there. The joint statement has rightly identified cooperation on pharmaceutical supervision and stronger links between Chinese enterprises and Indian IT industry among steps to address the trade imbalance and reach the 2015 target. But the "new paradigm" for cooperation Li outlined in India cannot be complete without collaboration on infrastructure and energy. The BCIM (Bangladesh-China-India-Myanmar) economic corridor, proposed to be developed through multi-modal connectivity by building road-rail-water and air linkages, would greatly reduce the cost of doing business among these countries. If pursued pragmatically, the Sino-Indian partnership can transform the regional economy and its stabilising impact would travel beyond South and Southeast Asia.

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