India resists pressure on trade pact

Wen visit: Bilateral trade target raised to $100 bn, pact signed on opening banking sector

Though Wen and Prime Minister Manmohan Singh raised the bilateral trade target to $100 billion, the joint communique issued after their meeting here had no reference to the trade agreement that the visiting Chinese leader pushed hard for. The two leaders, however, agreed to establish a strategic economic dialogue to enhance macro-economic policy coordination.

New Delhi welcomed Chinese enterprises to invest and participate in infrastructure development, like roads and railways. India also opened up its banking sector for China, with the Reserve Bank of India signing a memorandum of understanding with the China Banking Regulatory Commission.

Trade agreement

Briefing mediapersons after Singh and Wen headed the delegation-level talks at Hyderabad House here, Foreign Secretary Nirupama Rao said the two sides had not gone into the issue of trade agreement. “Our Chinese friends should know about the trade imbalances that exist between us. India has a huge trade deficit with China. We need greater market access for our IT, pharmaceutical and agricultural industries in China,” she said.

Wen told Singh that Beijing was ready to work with New Delhi to promote greater Indian exports to China with a view to lessen trade imbalance.

He also promised support for Indian participation in national and regional trade fairs in China, advancing trade facilitation, enhancing exchange and cooperation of pharmaceutical supervision, stronger relationships between Chinese enterprises and the Indian IT industry and speedier completion of phyto-sanitary negotiations on agro products. India however sought to wait for sometime to see the effects of the measures promised by Wen.

Rao said New Delhi hoped that the trade figures of the coming months would reflect the effects of the measures agreed upon by the two countries.

Immediately after arriving in New Delhi on Wednesday, Wen had told a business meet that India and China had completed feasibility study for a trade agreement and he would seek early launch of negotiations for the pact during his meeting with Singh.

The China-India trade is likely to cross $ 60 billion in 2010-11. But India’s trade deficit with China rose to $ 19 billion in 2009-10, from $ 1 billion in 2001-02 and it might reach $ 24-25 billion by the end of the current fiscal.

Wen and Singh agreed to constitute an India-China CEOs forum to deliberate on business issues and make recommendations on expansion of trade and investment cooperation.

While over 10 Indian banks have presence in China, Beijing has long been complaining about absence of any Chinese bank in India. The two, however, agreed on Thursday to allow the banks of the other country to open branches and representative offices. An MoU was also signed between the Export-Import Bank of India and China Development Bank Cooperation.

According to the joint communique, India and China agreed for closer cooperation for international financial economic reform and in the Doha Development Round of the WTO as well to strengthen communication and consultation within the G-20 framework.