India, China press each other for market access

Wednesday, 29 August 2012 01:24 - - {{hitsCtrl.values.hits}}

Reuters: India and China pressed each other for greater market access for their products from medicines to Bollywood films at a meeting of trade ministers on Monday, seeking to expand commercial ties between the Asian giants as they battle a global downturn.

Despite twitchy relations and occasional heated rhetoric, business relations between India and China have boomed for more than a decade. The two sides have targeted trade flows of $100 billion by 2015 from $75.5 billion now.

However, although China is one India’s largest trade partners, that trade is heavily skewed in Beijing’s favour. From just $1 billion in 2001-02, India’s trade deficit with China has ballooned to $39.7 billion in 2011/12.

China’s Trade Minister Chen Deming on Monday called on India to improve its business climate, including by making it easier for Chinese workers to get visas, when he met his Indian counterpart Anand Sharma in New Delhi.

He also raised India’s decision last month to impose a tariff of 21 percent on imported power equipment - a controversial move widely seen as targeting Chinese firms which have emerged as the main suppliers.

For its part, India has long complained that its companies, from IT and services to pharmaceuticals to Bollywood film-makers, are unfairly restricted when trying to enter the Chinese market. Exports to the world’s second-biggest economy have mainly consisted of raw materials such as iron ore.

No major breakthroughs were announced, although the two sides agreed to set up a joint group to improve the collection of trade data. China has also shown interest in investing in one of the flagship industrial zones India has planned to boost its manufacturing capacity.

“The two governments need to work together to create a better, easier and more relaxing and business-enabling environment for our potential Chinese and Indian investors,” Chen told reporters, through a translator. India has relied on cheap Chinese imports of power equipment to help plug electricity shortages that have held back economic growth. But Indian manufacturers complained that they were being flooded by cheap imports, and this year successfully lobbied for an import tax to be imposed.

Chen said the tariff would not deter Chinese investment.

“Those big Chinese power equipment producers are determined to continue their business, including investment and production activities here in India,” Chen said.

Diplomatic relations between India and China have thawed since the two fought a brief frontier war in 1962, but they remain wary of each other and have failed to settled a dispute over territorial claims on their borders.