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Coordinate better to deal with China: Commerce Ministry

A paper from the commerce ministry has advocated greater competition among Indian and Chinese companies and greater Chinese investment in manufacturing.

New Delhi | March 10, 2014 3:01:57 am
The new paper seeks to build on the old strategies with improvisations befitting the changed trade scenario. The new paper seeks to build on the old strategies with improvisations befitting the changed trade scenario.

THE commerce ministry in a draft paper on dealing with the increasing economic clout of China has suggested better cooperation among all economic ministries as a first step towards tackling the rising trade deficit with the northern neighbour.

“There is no coordination among economic ministries. The first step towards taking on China is to coordinate amongst the government departments, a demand which has been constantly made by industry. The paper has proposed that at least economic ministries should work jointly to help India bridge the trade gap,” a senior official told The Indian Express.

The ministry under former commerce secretary Rahul Khullar had earlier, in 2011, drafted an action plan for strategically countering the manufacturing prowess of China. In fact, a new China Division was carved out to have dedicated officials for dealing with the trade matters relating to the country.

The new paper seeks to build on the old strategies with improvisations befitting the changed trade scenario. Apart from better coordination, the paper suggests partnering of Indian firms with Chinese companies in areas where domestic manufacturing is strong. Also, China should be coaxed to not consider India as just a huge market but also invest and manufacture here.

The bilateral trade between the two nations declined by over 10 per cent to stand at $65.78 billion.

India exported goods worth over $13 billion to China and bought goods worth over $52 billion from it, resulting in a trade deficit of over $35 billion.

Though the top leadership of both the countries have pledged to take up the two-way trade to $100 billion by 2015, as the current pace it is likely to be highly skewed in favour of China. “The Chinese are taking on India even in the IT sector, which has so far enjoyed a stronghold across the globe. We have to sharpen our focus on such sectors and ensure that we remain leaders in these areas. Indian companies will have to do continuous value-addition. Since we cannot defeat them on pricing as of now, we will have to make up for that with value-additions,” the official said.

Earlier, the department had chalked out a five-pronged strategy for dealing with China. It included creation of non tariff barriers where dependence is high, ensuring Chinese state-owned procurement agencies buy in bulk from Indian companies; and leveraging the huge domestic market to gain access to Chinese markets.

Several other departments including power, telecom and IT have also been asked to look at sectors where they are not competitive so that duties can be restructured to usher in competition.

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