Saturday, December 18, 2010

India China Trade Relations

Overview

India China trade relations are the most important part of bilateral relations between India and China. From a temporary decline in the the influx of Chinese imports in the Indian markets, the scenario seems to have changed - India is enjoying a positive balance of trade with China. The India China trade relations are regulated by the India China JBC, which ensures a free exchange of products and services between the two nations.

India & China signed a Trade Agreement in 1984 which provided for Most Favored Nation Treatment and later in 1994, the two countries signed an agreement to avoid double taxation. The bilateral trade crossed US$13.6 billion in 2004 from US$ 4.8 billion in 2002, reaching $18.7 billion in 2005. The India China trade relationshave been further developed from 2006, with the initiation of the border trade between Tibet, an autonomous region of China, and India through Nathu La Pass, reopened after more than 40 years. The leaders of both the countries have decided to enhance the bilateral trade to US$ 20 billion by 2008 and further to US$ 30 billion by 2010. According to the Indian Commerce Minister, Kamal Nath, China would soon become India's largest trade partner within the next 2-3 years, after the US and Singapore.

Indian Exports to China under the India China Trade Relations


The principal items of Indian exports to China are ores, slag and ash, iron and steel, plastics, organic chemicals, and cotton. In order to increase the extent of exporting Indian goods to China, however, there should be a special emphasis on investments and trade in services and knowledge-based sectors. The other potential items of trade between India and China are marine products, oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment, and dairy products. Great potential also exists in areas like biotechnology, IT and ITES, health, education, tourism, and financial sector. 

Chinese Exports to India under the India China Trade Relations


The main items that comprise Chinese exports to India are electrical machinery and equipment, cement, organic chemicals, nuclear reactors, boilers, machinery, silk, mineral fuels, and oils. Value added items like electrical machinery dominates Chinese exports to India. This exhibits that Chinese exports to Indiaare fairly diversified and includes resource-based products, manufactured items, and low and medium technology products. It is said that if India is to capture the markets of China and enjoy profits, then it would have to discover new merchandise and branch out its exports to China.

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