India Inc,corp China reopen Silk Route

The spectre of a prolonged economic slump in the US and Europe has prompted the government and corporate India to sharpen their focus on economic ties with China.

The spectre of a prolonged economic slump in the US and Europe has prompted the government and corporate India to sharpen their focus on economic ties with China. There could be no greater proof for this than the recently-constituted India-China CEO Forum which ended the exclusivity of the high-profile India-US grouping of industry captains formed in 2005.

And the interesting thing is that the real spur for a permanent CEO forum with the worlds fastest-growing major economy came from corporate India,not the government. New Delhi has long remained diffident about Chinas potential as a lucrative trade and commercial partner for the country.

While Tatas,M&M,Bharat Forge and Sundram Fasteners have ramped up revenue from Chinese operations in recent years along with about hundred other Indian firms,Reliance ADAG and Bharti Airtel heralded a trend by clinching mega equipment purchase deals with Chinese firms in their quest for reducing costs. No wonder ADAG chairman Anil Ambani has been handpicked by the Prime Minister to be the co-chairman of the India-China CEO forum along with his Chinese counterpart.

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Analysts reckon that mutual investments between the two Asian giants would help both countries mitigate risks to their respective economies from the global economic crisis that increasingly seem to last for a longer period. On its part,India is keen that Indian firms are allowed to bid for the large Chinese government contracts in areas like IT,pharma and healthcare sectors.

India-China trade which stood at over $60 billion in 2010-11 with Chinese exports to India accounting for two-thirds of that has been growing at three-four times that of India-US trade for the last five years. Of course,India is a bit worried over Chinas $20 billion trade surplus with India and the fact that Indias exports to China consists predominantly of industrial raw materials like iron ore. But the growing profitability of Indian firms in China and the moves by Chinese power equipment manufacturers to set up units here could make economic engagement with China more beneficial for India in the coming years.

Last November,R-Power signed an $8.29-billion deal with Shanghai Electric for the supply of 36 coal-fuelled power plants to be installed in India. FE