The Sky Is the limit for India China Trade Relations

China and India Trade Relations

First Published: ADawnJournal.com December 3, 2009

In the recent past India and China have continued to show a willingness to continue enhancing their relationship, and especially when there are possibilities of signing a free trade agreement. It is not too long ago that these two Asian giants agreed amongst themselves to leave no stone unturned in resisting any powers bending their elbows to force them into a deal regarding green house gas emissions. It is an open secret that with the cooperation of India and China in many areas of common interest the whole area in general is going to reap huge benefits. However, analysts believe they need to do things faster than they are happening now for their mutual benefit.

The one issue that may need to be addressed soon by those who are involved is the large gap that exists in the China India trade. Whereas the Chinese were able to push exports to India worth $31 Billion, India on the other hand managed only a paltry $9 Billion, which is close to only one third of their counterparts’ trade volume. There many Indian business people and analysts who are a little concerned and they want the issue handled not only amicably but fast also. Because there also fears in some quarters that Chinese goods could have been dumped in India, there are measures being put in place to check just that.

It may appear as if more than half of the total Indian exports to China have basically constituted of unprocessed iron ore, may be due to the fact that China has a large manufacturing base that is hungry for iron. This ends up leaving a large gap for the Indian Business people to try and put in manufactured goods that should get a good market in China as well. Some of the areas that are being considered include IT, where India is known to have a real niche and the news is that some Indian IT companies are actually setting base in China. The Chinese continue to enjoy a wide market in India for their machinery which has enjoyed good patronage over time.

There already seems to be a good wave of cooperation between manufacturing companies in both countries who discover they can be of mutual benefit to each other. Several Indian IT and pharmaceutical companies are already enjoying the benefits of cross border trade and if truth was to be told, they are seeing a good return on their investment. Some of those that have stories to write home about include companies such as Infosys and Ranbaxy among others. However they still need to pull up their socks in order to gain all the potential benefits that await them.

On the other hand there success stories from China in India and the case of Huawei Technologies comes to mind very quickly. Their investment has brought such a boost to India communication industry, especially through their fiber optic cables investment. There are of course a few teething problems that need to be addressed sooner rather than later, if this encouraging trend is going to see the light of the day and experience some exponential growth. Both governments then need to clear the path for their thriving business communities and only time will tell how far they both will go.