India tells China: $63-b trade deficit untenable

India has cautioned China at the World Trade Organization that its $63 billion trade deficit with the country was unsustainable and mere lip-service to bridge the gap was not enough.

In its statement during China’s trade policy review at the WTO, New Delhi pointed out that Beijing needed to make serious efforts to lower trade barriers for rice, meat, pharmaceuticals and IT products from India to make a difference to the trade imbalance.

Stating that it was encouraging that a protocol on rice was signed during Prime Minister Narendra Modi’s visit to China in June, the statement said the inspection of plants by Chinese inspectors should be expeditiously carried out.

“Early completion of the process is necessary as it not only addresses a long-standing demand of India, but will also help exports from India to the mutual benefit of both countries,” said the statement, presented at the WTO on Wednesday.

India expressed disappointment that farm exports, including bovine meat, continued to face hindrances in the form of stringent and opaque regulatory requirements.

The hindrances remain despite China signing several protocols with India on import of farm products, especially bovine meat.

Recently, top Chinese leaders, including the Premier and the Trade Minister, had expressed their keenness to increase imports from India to reduce the trade deficit. “By bringing up the issue of trade deficit at the trade policy review, India wants to give a message to China that it wants promises to be turned into action,” a government official told BusinessLine .

On the scope of pharmaceutical exports from India, given the expansion of the Chinese public health programme, the Indian representative said that due to complex and onerous regulatory requirements, Indian generic producers were unable to access the Chinese market. “...an important step to expedite this process would be for China’s Food and Drug Administration to hold workshops for Indian pharma companies to enable them to build capacity to file requests for market approvals,” the statement said.

India said there was scope for collaboration between Chinese state-owned enterprises (SOEs) and the Indian IT sector, which could provide state-of-the-art, custom-designed solutions.

“In the services sector, the challenges for Indian companies include complex requirements for participating in contracts of SOEs and issues related to qualification requirements, licensing and taxation,” the statement pointed out, adding that visa restrictions, like permits being granted for only a year, remained an issue.

Trade policy review at the WTO is a periodic surveillance of national trade policies of members, the frequency of which depends on the member’s share in world trade.

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