Modi may ask China for enhanced investment

Modi may ask China for enhanced investment

India-China economic engagement is expected to be high on the agenda of Prime Minister Narendra Modi’s visit to the neighbouring country from May14-16. On one hand, Modi is expected to seek greater access for Indian goods and services in the Chinese market. On the other, he will press China for higher investments in India.

While greater Indian access to the Chinese market is important for correcting persistent trade imbalance between the two countries, a higher Chinese investment in India will help Modi realise his commitment for Make in India.

India-China trade totalled $65.50 billion last year but the trade surplus was heavily tilted in China’s favour. China’s investment in India is miniscule compared with its investments in other countries of the globe. However, during Chinese President Xi Jinping visit to India in September last year, Chinese companies had committed $20 billion investment in Indian infrastructure and manufacturing sectors.

“The progress on this investment commitment will be reviewed during Modi’s visit,” a government official told Deccan Herald. Ficci Secretary General Didar Singh, who visited China after Xi’s trip here, said the Chinese were quite serious about this investment into India and they had begun work.

“India - China economic engagement needed to shift focus from trade relationship to that of investment because only increased investments can address the existing trade imbalance between the two neighbours,” he said.

Officials said that efforts will be made to convince Chinese manufacturers to set up their base in India to promote the ‘Make in India’ initiative. One way to correct India’s trade imbalance with China could be to increase India’s services export to that country. According to officials, Modi is expected to press Chinese authorities to allow India to enhance its export information technology and information technology-enabled services (IT and ITeS).

Agriculture, auto components, textiles and pharmaceuticals are other areas where India has made a beginning. Steps will be taken during prime minister’s visit on how to increase India’s footprints in China in these areas.

Another concern that Indian authorities are expected to address with their Chinese counterpart is the issues related to non-tariff barriers that India’s pharmaceuticals and IT services face in that country. These barriers prevent India’s companies from tapping the vast Chinese market.

Chinese firms have also evinced interest in participating in Digital India programme and setting up industrial parks in India. Modi’s visit is expected to formalise some of these plans, officials said.

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