Press Information Bureau
Government of India
Ministry of Commerce & Industry

30-April-2012 17:04 IST

Trade Deficit with China

      Details of trade between India and China during last three years are given below:-

            TABLE-1:  Bilateral Trade Statistics                                 

(P)* Provisional     (Source; DGCI&S) 

Chinese export to India relies strongly on manufactured items meeting the demand of fast expanding sectors like telecom and power in India. Chinese companies supply relevant equipments at competitive prices. India’s exports are characterized by primary products, raw material and intermediate products. Further there are non-tariff barriers on imports of agricultural products in China as well as limited market access of Indian products.

    The Government of India has been addressing the issue of growing trade deficit at the highest level. At the Ministerial level, we have India-China Joint Group on Economic Relations, Trade, Science and Technology (JEG) where trade related issues are taken up regularly. The Eighth Session of India-China JEG was held on 19^th January, 2010 in Beijing. As an outcome of 8^th JEG a Memorandum of Understanding on extension of Trade and Economic Cooperation was signed. The MoU recognises that a balanced trade is conducive to long term, sustainable and harmonious development of economic cooperation between the two countries. Indianexporters are encouraged to participate in major trade fairs in China to show-case Indian products in the Chinese market and increase engagement with Chinese companies. Participation of Indian exporters in trade fairs aims to promote Indian products amongst Chinese importers.  With a view to reducing trade deficit, efforts are also being made to diversify the trade basket with emphasis on manufactured goods. We are also pursuing market access issues to tackle non-tariff barriers in the Chinese market at different fora. Business to Business relations are encouraged through schemes such as Market Access Initiative (MAI)/Market Development Assistance (MDA). Apart from these measures the Government of India is alive to the challenges of import surges and various unfair trade practices through available safeguard measures under WTO.

The first India-China Strategic Economic Dialogue (SED) took place in Beijing from Sep 26-27, 2011. This dialogue was chaired by Deputy Chairman Planning Commission from Indian side. The objective of the Dialogue was to discuss world economic situation, respective domestic macro-economic situations, goals and implementation of the mid and long-term economic and social development plans of the two countries as well as their respective industrial, fiscal and monetary policies and agreed to enhance pragmatic cooperation in economic sectors. Thus India –China Strategic Economic Dialogue (SED) looks beyond the bilateral issues faced by the two counties and is a forum for both sides to discuss strategic macro-economic issues impacting both nations as a result of the changing international economic and financial landscapes to share individual best practices in handing challenging domestics economic issues and to identify specific fields/areas for enhancing cooperation, learning and experience sharing. Specific issues related to the export and import of goods between the two countries does not lie within the ambit of the SED.

(e) & (f)           During the   Eighth Session of India-China Joint       Group on Economic Relations, Trade Science and Technology (JEG) specific requests were made, inter-alia, for greater import of IT and ITES by China from India. The Chinese side were also requested for removal of procedural bottlenecks, including time consuming licensing procedures being faced by Indian drugs and pharmaceuticals.

            As an outcome of 8^th JEG a Memorandum of Understanding (MoU) dated 19^th January 19, 2010, on extension of Trade and Economic Cooperation was signed between India and China. As per Para III of the MoU, “Realising the potential of IT and ITES in expanding their bilateral cooperation, the two sides will take initiatives to encourage their industries to collaborate to mutual benefit and explore new opportunities”. Para-IV of the MOU says “Both side will actively cooperate and take positive measures to facilitate each other’s pharmaceutical companies to increase exports to the other country”.                    

This information was given by Shri Anand Sharma ,  Union Minister for Commerce, Industry and  Textiles  in written reply to a question in  Lok    Sabha today.

 DS/GK

Trade deficit management: diplomatic, market access and safeguard measures to address imbalance and promote export diversification. A persistent trade deficit attributed to China's competitive manufactured exports and India's primary product export profile is being addressed through ministerial mechanisms such as the India China JEG and a Memorandum of Understanding on Trade and Economic Cooperation, promotion of Indian participation in Chinese trade fairs, diversification toward manufactured exports, Market Access Initiative/Market Development Assistance, market access negotiations to remove non tariff barriers, and recourse to safeguard measures under WTO where necessary.