Macro Economy

Trade deficit: India wants concrete steps from China over mere delegation visits

Amiti Sen New Delhi | Updated on July 27, 2018 Published on July 27, 2018

Prime Minister Narendra Modi at a meeting with Chinese President Xi Jinping in Johannesburg, South Africa on Friday   -  PTI

In a meeting with Xi in Johannesburg, Modi reiterates need to address concerns

Prime Minister Narendra Modi, in his meeting with the Chinese President Xi Jinping in Johannesburg on Thursday, made a case once again on the need to increase Indian exports to China to bridge the widening trade deficit with the country.

The leaders agreed on the visit of two trade delegations from India to China in August to secure market access for sugar, soya, non-basmati rice and pharmaceuticals, Foreign Secretary Vijay Gokhale said at a press briefing after the bilateral meeting on the sidelines of the BRICS meeting.

It is, however, time for Beijing to move beyond just lip-service and take concrete measures to remove non-tariff barriers to exports to substantially dent the annual $63-billion trade deficit with New Delhi. Over the last few years, the Chinese Premier and other senior officials, including the Trade Minister, have been continuously acknowledging the need to address the trade deficit with India and have also been signing memorandums of understanding to increase exports of items such as buffalo meat, pharmaceuticals, soya and IT.

Despite the MoUs and the promises, precious little has been done by China to import larger quantities from India of any product. As a result, while over the last decade India’s imports from China increased by $50 billion, the country’s exports to its neighbour rose by a mere $2.5 billion, according to a Parliamentary Committee report.

“Across the board on trade related issues where India had problems, we are seeing forward movement in terms of delegations visiting China to discuss imports,” Gokhale said at the press conference.

But, Beijing clearly needs to do more than just facilitate delegation meets. While Chinese leaders have been expressing their intention to change things positively for India since the beginning of this year, nothing substantial has moved on the ground yet. Beijing promised to start import of certain items such as rice, soya, meat and sugar from India, but orders haven’t started coming in.

Experience shows that till orders are placed, it doesn’t pay to start rejoicing where China is concerned. A bitter example would be the case of buffalo meat. While in the last two-three years, China has sent a number of quality inspectors to inspect export houses in India, none have passed muster and buffalo meat is still not exported from the country.

Very recently, China sent its team of quality inspectors to examine rice plants, but there is no confirmation yet on whether orders would be placed.

While it is important for Modi to impress upon the Chinese leadership the need to address the trade deficit every time there is a bilateral meeting, New Delhi’s growing impatience at the lack of result-oriented action also needs to be adequately communicated.

Published on July 27, 2018
This article is closed for comments.
Please Email the Editor