‘Indo-China trade needs to diversify’

New Delhi, November 12:

Diversification of the export basket could help the India-China trade nearly double in three years to $30 billion from the current levels of $17.6 billion, states a new study by the Federation of Indian Chambers of Commerce and Industry (FICCI).

“Such a prospect looks feasible if vigorous efforts are made by both sides in the ‘China-India Friendship Year-2006’ to diversify the export products from India and new products are identified for trade,” states FICCI in the study released here today.

Focusing on the deepening economic engagement between India and China, the FICCI analysis notes that while India’s exports to China are largely restricted to primary and resource based products, Chinese exports to India are fairly diversified and include resource based products, manufactured items as well as low and medium technology products.

The key items of India’s exports to China in 2004-05 included ores, slag and ash, iron and steel, plastics and articles thereof, besides organic and inorganic chemicals.

On the other hand, India’s imports from China present a balanced picture with both resources based and manufactured products listed in the top 10 imports. These included electrical machinery and equipment, nuclear reactors, mineral fuels and products, organic chemicals and silk.

“India should capitalise on the growing demand of construction industry in China, especially for products like iron ore, slag, ash, plastic and linoleum. While the demand for specialty steel is strong in China, both due to the booming housing and industry construction, China is also emerging as a big importer of aluminium, especially for its communication and transport infrastructure,” states FICCI report.

Tanned hides, diamond jewellery, decoration and furnishings, fish and frozen seafood and

cotton yarn/fabrics are among 14 products that FICCI has identified as holding potential to boost exports to China.

“Project exports are also an important area, particularly as China receives a large amount

of multilateral loans and Indian companies can participate in projects enjoying multilateral funding,” states FICCI.

The leading industry lobby, under a fast track partnership initiative with its Chinese counterpart, has set up six task forces on WTO, pharmaceuticals, computer hardware, education, chemicals, electronics and telecom with an objective to enhance sectoral ties and create new connectivities.

While total Chinese investment inflows into India has been around $3.5 million during August 1991-July 2006, total approved Indian investments in China are estimated to be about $161.4 million during April 1996-February 2006.

The key sectors where Chinese companies have invested in the Indian market include telecommunications, metallurgical industries, commercial, office and household equipments, transportation industry and electrical equipment.