The Chinese response to the imbalance in the trade imbalance in the India-China trade in favour of the latter has been swift and strong. As many as 40 Memoranda of Understanding (MoUs) were signed in New Delhi between top state-owned & private Chinese enterprises and Indian corporates to source a range of products worth over US$ 390 million from India such as polyethylene, polypropylene, marine products, aluminum, manganese, cotton, chrome and castor oil, etc.
Among the major Indian companies which exchanged MoU documents with Chinese corporations are: Reliance Industries Ltd., Sterlite Industries Ltd., Ranbaxy, Adani Wilmar Ltd., BALCO, Bharat Mining Company and TT Ltd.
The MoU were signed in the presence of Mr. Gao Hucheng, the Chinese Vice Minister of Commerce and Mr. Dinesh Sharma, Joint Secretary, Ministry of Commerce at a business meeting organized by FICCI.
Mr. Hucheng said, the Chinese response comes in the wake of the Prime Minister, Dr. Manmohan Singh's visit to China last year where he had expressed the hope that the Chinese government would take positive steps to redress the trade imbalance of US$ 16 billon against India by sourcing Indian products for the Chinese market.
China, he said, was a huge market and invited Indian investors and entrepreneurs to visit China and determine the Indian products that would appeal to the Chinese people.
Dr. Amit Mitra, Secretary General, FICCI, proposed that in order to balance the trade between the two countries and build sustainable trade relations, the two governments could look at five or six items which were being competitively produced by India and being exported to the US, Europe and Japan. These identified thrust items would be acceptable in the Chinese market because of the competitive price and India would get easy access to the Chinese market.
Mr. Dinesh Sharma, Joint Secretary, Ministry of Commerce, pointed out that China was India's largest trading partner and currently India's exports consisted mainly of raw materials and low value products.
Of the US$ 38 billion total bilateral trade` volume in 2007-08, India's exports were valued at US$ 11 billion and imports from China at US$ 27 billion. As high as 50% of the value of exports were accounted for by iron ore.
Mr. Sharma said, the MoUs signed today would strengthen India-China B2B ties and trigger more close trade exchanges to address the problem of trade imbalance and make the trade basket more diversified and widespread.
Federation of Indian Chambers of Commerce and Industry
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