India has raised strong concerns with China over rising bilateral trade deficit that has crossed $40 billion in 2012-13 despite promises by Beijing of initiating steps to contain it and has demanded early action.

Chinese Vice-Minister of Commerce Chen Jian is scheduled to meet Commerce Secretary S.R. Rao next week in New Delhi to discuss how to move forward on proposals flagged by India last year including greater market access in pharmaceuticals, agriculture and the IT sector to bridge the trade gap.

This will be a preparatory meeting before Chinese Premier Li Keqiang’s visit on May 20 where the two sides are expected make a number of announcements, many of them related to improving bilateral trade ties.

“We have expressed our displeasure to the Chinese Ministry of Commerce for not responding to the proposals made by India last year during the Chinese Commerce Minister’s visit. China has indicated that this time during the Premier’s visit it would sign a formal protocol and have a work plan for all the working groups,” a Commerce Department official told Business Line .

India’s exports to China dropped a whopping 25 per cent to $13.52 billion in 2012-13 from $18.11 billion largely due to a slowdown in the Chinese economy.

The fall in imports from China was much lower at 5.59 per cent to $54.30 billion from $57.51 billion the previous year.

Bilateral trade deficit, as a result, widened to $40.8 billion from $39.4 billion, which is almost a fifth of the country’s total trade deficit.

While India mainly exports raw materials to China like iron ore, copper and raw cotton, the Commerce Department is of the view that there is immense scope to export pharmaceuticals, IT and more agriculture products if the country drops its various restrictions.

India has suggested that the registration process of the Chinese State Food and Drug Administration should be simplified and registration granted sooner.

Moreover, Indian companies that have received approvals and accreditation by drug regulatory authorities should be provided a green channel.

In a bid to increase IT exports, India has proposed that the Chinese Government give instructions to its state-owned companies to start doing business with Indian companies and also levy the lowest applicable tax on the industry.

It has also suggested that qualified technical engineers and software professionals be given business visas and work permits valid for three years to facilitate movement.

India has also been lobbying to sell buffalo meat, tobacco and oilmeal to China as all these products have a big market in the neighbouring country and could play an important role in lowering the trade deficit.

>amiti.sen@thehindu.co.in

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