China-India trade to cross $100 b mark in 3 years
Sunday, 30 March 2008

Diplomatic relations notwithstanding, bilateral trade between India and China is growing more than 50% year-on-year and is slated to cross the $100-billion mark in three years, report agencies.

Much of the growth is due to initiatives being taken by small and medium enterprises on either side of the border.

A publication, Business opportunities for Indian SMEs in China, says the SMEs are now looking at Chinese firms more as potential buyers and partners rather than competitors.

The study was carried out by the Federation of Indian Micro and Small & Medium Enterprises (FISME) and commissioned under project, Strategies and preparedness for trade and globalisation in India, by the department of commerce, Unctad India and DFID.

The study has identified maximum potential in textiles and apparel, leather, chemicals and dyes and marine and tea/coffee sectors, and points out that opportunities lie more in specific product categories or niches than across sectors.

For example, in leather alone, China imports goods worth $4 billion, much greater than entire exports from India to the rest of the world. Ironically, China so far has not been on the radar of Indian leather exporters.

Similarly, in inorganic chemicals, China’s imports are at $6.3 billion compared to India’s exports to China at just $316 million.

The study notes that while trade in India and China is individually growing at 20-25% a year, the growth rate of trade between the two countries is growing at a scorching pace, at double the rate of 50% a year.

The study provides certain insights such as in sectors like engineering and electronics, the potential of mutualism and collaboration is enormous.

A large number of Chinese SMEs with excellent manufacturing facilities historically relied on Hong Kong-based traders for exports.

Many Chinese SMEs do not have exposure to direct exports and suffer language handicaps. However, Indian companies could tie up with such Chinese SMEs, supplement them with their Indian operations and export to third countries.

Examples such as Mahindra & Mahindra in small tractors underline the potential opportunity where Chinese and Indian operations have complimented each other to win the US market.

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