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``Use China as production base''

By Our Special Correspondent

NEW DELHI, APRIL 10. The Confederation of Indian Industry (CII) has called for the diversification of the export basket to attain the desired $ 20 billion trade between India and China by 2010.

Quoting a study undertaken by it, the CII said special focus on investments and trade in services and knowledge-based sectors other than the traditional manufacturing sector must be given in view of the dynamic comparative advantage of India.

Bilateral trade between the two countries reached $ 13.6 billion in 2004 compared to $ 7.6 billion in 2003, from a low base of $ 338 billion in 1992. The diversification of the trade basket would impact the volume of trade as well as result in qualitative shifts, the study said.

It has pointed out that Indian companies could enter the $ 615 billion Chinese domestic market by using China as a production base. Potential sectors and markets could be identified for investment for short term, medium term and long term returns, the paper added.

According to the CII, trade in services is an important form of trade to enhance comprehensive bilateral trade and economic cooperation.

The study also notes that services and knowledge trade between India and China has significant potential for growth in areas like Biotechnology, Information Technology and Information Technology-enabled Services, Health, Education, Tourism and Finance.

There is also an urgent need to shift the focus from primary exports to the export of high value-added products, says the study.

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