India and China took the first step towards addressing the severe imbalance in their trade by signing 11 MoUs during the second India-China Strategic Economic Dialogue here on Monday. The agreements envisage investments of over $5 billion (about Rs. 28,000 crore).
Most MoUs envisage Chinese investment which policymakers, including Prime Minister Manmohan Singh, feel is the best way to partly offset the balance of trade currently heavily skewed in China’s favour.
One MoU gives India a toehold in the IT sector, which along with pharmaceuticals and services, is the other focus area for increasing its presence in the Chinese economy.
An agreement was signed between the Planning Commission and China’s National Development and Reform Commission (NDRC) for undertaking joint studies in economic policy research and development planning.
The NRDC also signed another MoU with the Bureau of Energy Efficiency.
Indian Railways and its Chinese counterpart signed a MoU, marking the beginning of cooperation between the two public sector behemoths. Having started out with route length that was more than that of Chinese Railways, the Indian Railways has fallen behind and today is in urgent need of affordable technology for running high-speed trains and heavy duty freight trains.
IT major NIIT signed an $800 million deal with the Province of Hainan for setting up an IT technology park to add to its operations in China.
Another agreement in this sector was signed between NASSCOM and China Software Industry Association (CSIA) for enhancing cooperation in IT and ITES sectors.
If most of these agreements indicate the shape of things to come, the remaining MoUs pertain to Chinese investments, mainly in the power sector. These include an MoU between Reliance Power and Guangdone Mingyang Wind Power Industry Group Co for a 2,500 MW renewable energy project with $3 billion project financing from China Development Bank (CDB); Lanco Group pact with CDB for the Anpara Phase-II Power projects (4X660MW); and, another Lanco MoU, worth $98 million, with Zhejiang Feida for the Amarkantak Power project.
The last power sector-related MoU deals with Zhongtian S&T manufacturing electric conductors and transmission lines in Andhra Pradesh for $20 million.
The steel sector will also witness Chinese presence, with Uttam Galva Steel giving the engineering, procurement and construction contract for Phase II of a steel plant to China Metallurgical Group Corporation Overseas Ltd.
The last MoU is for multi-city ‘Waste to Energy’ projects on ‘build operate and transfer’ (BOT) between Ramky Enviro Engineers and Sanfeng Environmental Industries.
Initially the project will take off in New Delhi, Mumbai and Hyderabad and Chennai at an investment of $384 million.