Over the last decade, a series of top-level political visits between India and China has established a new trajectory of engagement. A conducive atmosphere for bilateral economic cooperation has been created and strengthened. Trade between the two Asian giants has soared from just over $7 billion in 2003-04 to $67.8 billion in 2012-13. Indian companies have entered the Chinese economy with cumulative pledges of over $1 billion. Chinese investments in India aggregated $657 million by October 2012.
The scope for further investments in both directions is high, and industry of the two countries should leverage the strong direction shaped by the governments to take our multidimensional economic engagement to a new level.
To translate new opportunities into mutual gains, both sides can now aim at going beyond trade and investment to real development cooperation. Sharing of best practices and models in areas such as skill development, healthcare, participatory governance, and other development fields could offer rich benefits.
India has made good progress in life sciences industries such as biotechnology and pharmaceuticals. By sourcing drugs from India, China could offer better healthcare services to its citizens. Similarly, China has taken great strides in rural development through its town and village committees, which have decentralised economic development. India could learn from this model for empowering its 600,000 villages.
Likewise, while China has developed high capacity in advanced manufacturing and technology-rich electronics, India has built an impressive software and IT services sector. The convergence of the two is already taking place as global companies source hard and soft inputs from both countries. A real partnership between the two countries could take this convergence to the next level.
China’s cities and urban development has been one of its major success stories. Transport, low-cost housing, sanitation, water management and related sectors have attained high efficiencies in the country. India too is embarking on an ambitious project of building clean and green manufacturing townships. The participation and investments of Chinese companies could go a long way in devising best models for India.
We also need to learn from China’s renewable energy prowess. We see opportunities for growth across all conventional areas such as manufacturing, services, infrastructure and the financial sector.
The current bilateral trade scenario offers some concerns with respect to the trade imbalance, low value addition of Indian exports to China, and concentration on a few items. To redress this imbalance and make trade more sustainable, it is necessary to incentivise Indian exports to China. More transparent laws and procedures, mutual recognition of standards and harmonisation of conformity assessment procedures, and greater cooperation in trade finance could help this process.
India and China stand at a historical juncture where global affairs are transforming. Innovative cooperation mechanisms, especially in economic engagement, could stimulate a new sustainable partnership within this changed context.
Author: Chandrajit Banerjee is Director General of Confederation of Indian Industry (CII)
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