New Delhi: India is looking at a window of opportunity to boost exports of items such as soybeans, fruits and vegetables to China as its northern neighbour targets agricultural imports from the US.
In the 11th Joint Economic Group on Economic Relations and Trade summit to be held between the two countries on Monday —after a gap of four years—India’s trade minister Suresh Prabhu will push for greater agricultural exports to China with his counterpart Zhong Shan to help reduce the massive $50 billion trade deficit between the two countries.
China on Friday announced a list of US goods worth $3 billion for possible retaliation after US President Donald Trump approved tariff hikes on Chinese imports up to $60 billion to curb alleged unfair trade practices by China. Though the initial list of sanctioned goods announced by China did not include soybeans which are the biggest US export to China, experts widely believe China may have saved it for more drastic measures to be announced after the US tariff hikes come into effect. China was the second largest market ($19.6 billion) for US agri exports in 2017 after Canada, according to the US department of agriculture.
China buys soybeans worth $14 billion annually from the US, according to the American Soybean Association.
Though higher competitiveness in manufacturing is the main reason behind China’s huge trade deficit, Indian exporters often complain of Chinese non-tariff barriers. Chinese exports to India rely strongly on manufactured items to meet the demands of fast expanding sectors like consumer electronics, telecom and power, while India’s exports to China mainly comprise primary and intermediate products such as iron ore, cotton yarn, petroleum products, pearls and marine products.
Prabhu will bring up the issue of lack of substantial progress in the five-year development programme for economic and trade cooperation signed between the two countries in September 2014 to address the trade gap, a commerce ministry official said speaking under condition of anonymity. “He will seek greater market access of Indian agricultural products like soybean oil meals, rapeseed, rice, fruits and vegetables, and sugar,” the official said.
Issues relating to exports of pharmaceutical products will also be brought in by the Indian side. In China, Indian pharma companies face regulatory hurdles in the form of prolonged and unpredictable timelines for registering Indian drugs, which have adversely impacted expansion plans of these firms. India will also seek cooperation and market access in IT and IT-enabled services as well as in tourism, audio-visual and healthcare sectors.
The Chinese side is expected to seek a “fair environment for competition” for its goods in India as imports from China often face anti-dumping duties by Indian authorities to protect local industry from unfair competition. It may also seek greater market access in items like apples and pears, the official said.
Prabhu said in an interview with Mint in November 2017 that he told Zhong in Manila in September that India’s huge trade deficit with China is not sustainable. “After some convincing, they have agreed to look at each and every sector, wherein we can actually export more by giving more market access, thus reducing trade deficit in a phased manner. This is the first significant change that has happened in our bilateral relationship,” he added.
Both sides may also seek to find some common ground on the rising protectionist measures by the US administration. Biswajit Dhar, professor of economics at the Jawaharlal Nehru University, said though there cannot be a joint statement condemning the US as both China and India have diverse interests, both sides should try and see if they can come to some common understanding on how to keep global trade free and fair by reiterating the primacy of the World Trade Organization.