CII in association with its knowledge partner, Avalon Consulting released a report at a special session on “Accelerating Indo-China Economic Engagement” organized by CII on 24 April, 2015 in New Delhi. The session was held as a part of the Global Exhibition on Services being organized by CII, the Department of Commerce and the Services Export Promotion Council from April 23-25, 2015 in New Delhi.
The report titled “Accelerating the Indo-China Economic Engagement” outlines the overall strategy for accelerating economic engagement between India and China, including initiatives required both at the government and industry levels. It also identifies specific sectors for driving increased exports to China as well as sectors where India should attract and leverage investments from China. The report recommends a 4 point action plan to do so.
- To leverage India’s Importance - Market and Investment Destination for China
- To push for Market Access in Key Sectors where India can Add Value to Chinese Economy – Pharma, IT, Tourism, Media and Entertainment, Auto Components
- To prioritise Chinese FDI in 18 identified industry sectors and a Sovereign Deal to Attract Investment in Indian Infrastructure
- To set up an institutional basis (Government cum industry) within the PMO or MOCI to direct and monitor the achievement of Goals
According to the report, bilateral trade between India and China has seen rapid and unbalanced growth since 2008. Bilateral trade crossed $65 billion in 2013. Chinese imports have grown sharply relative to Indian exports resulting in a record deficit of $35 billion in 2013. India has emerged as one of the key markets for China growing at a faster rate than most of its other key trading partners. Today, India’s imports from China continue to be dominated by high-skill and technology intensive manufactured products while exports are mainly primary commodities.
The report recommends that to promote exports and investments, India will need to push for specific actions in certain identified sectors like IT Services, Pharmaceuticals, Auto Components, Tourism and Entertainment. Across these targeted sectors, India has a potential to generate revenues greater than $10 bn in 4-5 years – nearly 80% of the exports of India to China in 2013. Indian companies need to change their mindset towards China and invest for the long term by committing resources in terms of technology, capital and senior management and work in close co-ordination with the Indian Government, which has a critical role in enabling market access in China.
In addition, to encouraging Chinese FDI in India, India needs to prioritise 18 sectors for Chinese FDI in specific areas under Capital Goods, Specialty Products, Consumer Goods and Infrastructure. India should actively consider a sovereign deal with China for active investment in Indian infrastructure projects which can benefit both countries immensely.
An executive summary of the report is detailed.