India and China can emerge as the world’s largest trading partners by 2030 with bilateral trade set to rise from 63 billion dollars now to 100 billion dollars in the next four years, industry body ASSOCHAM said today.
China has already raced past the United States, Britain and Japan to become India’s largest trading partner. Indian companies can gain substantially by accessing Chinese capital goods at attractive prices by way of imports, said The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
It said the government’s proposal to hike tariff and non-tariff barriers on imports of some Chinese goods or impose a complete ban on specific items like power and telecom equipment will send negative signals to India’s trade partners and affect investment climate in key sectors.
Indian exports to China jumped 68.8 per cent to 19.6 billion dollars in 2010-11 from 11.6 billion dollars in the previous year. The imports also increased 41 per cent to 43.5 billion dollars from 30.8 billion dollars in the same period.
“Economic relations between India and China are among the most significant in current global economic scenario,” said ASSOCHAM secretary general D.S. Rawat. However, the trade gap must come down. Indian companies must scale up operations and widen their product portfolio to increase exports of finished, value-added products.
Several Indian firms – mostly in pharmaceuticals, information technology and IT enabled services sectors – have got a strong footing in China.
Both countries entered into a trade agreement in 1984 which granted them the status of Most Favoured Nation (MFN). Ten years later, they signed the Double Taxation Avoidance Agreement (DTAA).
In 2003, the Bangkok Agreement was signed under which India provided concessions on 188 products exported to China. On the other hand, China provided preferences on tariff for 217 products exported from India.
“There are complementarities as India has excelled in services sector – especially in knowledge-based services – while manufacturing has emerged as the mainstay of Chinese economy,” said Mr Rawat.
India is the tenth largest trade partner for China and its seventh largest export market. In India’s total trade, China’s share has increased to over 10 per cent.
Most Indian exports to China comprise of metals, ores, iron and steel besides cotton while imports are of electrical machinery and equipment, nuclear reactors and boilers, organic chemicals, fertilisers, iron and steel.