India and China have agreed to work towards bridging the fast-widening trade gap between the two countries, although they did not commit to any specific new measures in Tuesday's talks. The two countries did, however, reach an understanding on the contentious issue of employment visas for Chinese workers, with India agreeing to raise the quota for foreign visas for power and steel projects.

But it was India's growing trade deficit with China that set the agenda at the eighth Joint Economic Group (JEG) dialogue between the two countries which was being held after a four-year gap. Since the last JEG, the trade imbalance has risen by $10 billion, to an estimated $14 billion last year out of a total trade volume of $43 billion.

Bilateral trade fell by 20 per cent in 2009 on account of the financial crisis. Indian exports suffered the brunt of the decline, down by more than 40 per cent as of October.

Minister of Commerce and Industry Anand Sharma said the two countries had 'very frankly' discussed the imbalance, as well as “the measures required to ensure there is a balance in India and China's economic engagement.”

In talks with Chinese Commerce Minister Chen Deming, he called on China to give “encouragement to Indian entities in the field of IT [Information Technology], pharmaceuticals and construction, which are working along with Chinese partners to have more presence and access.”

“We have an imbalance, a gap in trade, which we need to meaningfully address with pragmatic means,” Mr. Sharma told a forum of Indian and Chinese businesses earlier on Tuesday. But India did not secure any specific commitments from Chinese officials in addressing the issue.

The memorandum of understanding signed by the two countries stated China would “strive to import as much of its requirement of value-added goods from India as possible.” It also said the two countries would realise “the potential of IT” in expanding bilateral co-operation, and take measures to increase exports of pharmaceutical companies of both countries.

Following the last JEG in New Delhi in March 2006, the two countries made similar commitments, to diversify India's exports and improve market access for Indian companies here. But the trade deficit has since only grown, from $4 billion then to $14 billion last year, according to the most recent data available.

But Mr. Sharma said the Chinese had shown 'sincerity' in addressing the problem. “These are not issues we can resolve once and for all,” he said. “What is important is that they have taken on board our concerns.”

Addressing Chinese concerns on the recent enforcement of visa rules for workers on infrastructure projects in India, India has agreed to raise the quota for foreign workers on power and steel projects, Mr. Sharma said. Earlier, a limit of 20 employment visas was set for a project, officials said. Now, it has been raised to a maximum of either 40 per project, or one per cent of the total number of employees, if that number was higher.

“This change followed a specific request from China,” Mr. Sharma told reporters. “We appreciate the partnership of Chinese companies in major infrastructure and power projects and will be welcoming and supporting greater Chinese engagement in India.”

More In: Economy | Business