India-China trade deal must benefit exporters

Prime Minister Dr Manmohan Singh's China visit could not  have come at a better time than this. With both nations emerging as global economic super-powers, there is a need for more cooperation than competition between them. And this visit did ensure that.

Both countries have signed 11 MoUs to boost bilateral relations - which in itself is good news. Raising the target for two-way trade between the two Asian giants by 50 percent...pegging it at $60 billion for 2010 is also a good move.

However,  despite these initiatives to boost trade, China will have to remove non-tariff barriers, administer exchange rates and strengthen its Intellectual Property Rights regime. Above these measures, China will also have to ensure greater market access for Indian goods in order to lessen India's widening trade deficit. Moreover,  administrative barriers and regulatory regimes are far too many and far too complicated...this is not what the exporters are comfortable with.

I believe that Indian exporters too need to diversify  their  export  offerings  to China and focus on exports of non-traditional items.

Having said that, it was indeed a good move by the Indian government to take a firm stance of not entering into a Free Trade Agreement (FTA). There are  a  lot of areas where China needs to make certain  amendments. Already there is a surge in cheap imports from China. Plus the Chinese currency is pegged to the dollar and is not a free floating currency. With an artificially pegged currency and subsidies, the Chinese exports have an unfair advantage.

So till things are sorted out, the FTA can wait.

Monthly Economic & Commercial Report on Singapore for November 2007 giving latest updates on developments directly affecting India's foreign trade and investment. Read More...

You are quite right in the assumption that UPA Government may not venture in to a real budget, may be, slowly tread in to populist one, which will lead to snail-paced economy which may run at the speed of a tortoise, may be with a tardy progress...An appropriate Focus!!!

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