India will raise the issue of the huge bilateral trade imbalance during Chinese Premier Wen Jiabao's three-day visit to the country beginning Wednesday, government sources said.
In particular, India is seeking a better environment in China for its export mainstays — pharmaceuticals and software. From the Chinese side, India expects a more diversified trade basket.
Low value
“China does send big buying missions. But they buy more of the same — iron ore, cotton yarn, aquatic products etc. Except for iron ore, the rest are low value items. We cannot go on selling the same stuff that is low value,” the sources said.
India also wants Beijing to analyse why its exports of pharmaceuticals and software do well in the rest of the world but not in China.
In pharma, the Chinese licensing process is seen as too onerous and time-consuming. It takes the Federal Drug Agency nine to 12 months to clear a pharma product for entry into the United States market. On the other hand, the same process takes three to four years in China. By then the market conditions change.
In this respect India has reminded China how it solved the problems faced by its telecom companies and expects reciprocation with regard to pharma and software.
“We helped resolve the issues in the telecom sector and now have a system that is non-discriminatory and transparent,” they pointed out.
Only firm
In the software sector, all the major Indian companies are present in China. But most of them service only European and American companies. TCS is the only company which has won a major contract from the Bank of China.
“We need more such examples. The Chinese tend to give software contracts to their own companies. But these companies are not in the same league as the Indian companies,” the sources added.
The bilateral trade deficit is estimated to be $19.2 billion, which the Chinese say they are trying to address.
Unhealthy
“I must stress that China is not purposely seeking a trade surplus with other countries and we are ready to work with countries concerned to minimise the imbalance. Because we know in the long run, a big gap in trade is not healthy and sustainable,” Chinese Ambassador to India Zhang Yan said here on Monday.
Mr. Zhang's solution to the problem was expanding tourism linkages, greater Chinese investment in the Indian manufacturing sector, improved financial cooperation between the two countries and starting the process of negotiating a Free Trade or Regional Trading Arrangement.
During Mr. Wen's visit, “we may look into the possibility of setting up more authoritative and effective mechanism such as strategic and economic dialogue,” he suggested.
