Economic Relations, Addressing the Deficit Problem, Indian Companies in China and Chinese Companies in India

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Economic Relations

  • The two countries resumed trade officially in 1978

  • 1984: signed the MFN agreement

  • China is India’s largest trading partner. Accounted for a share of 9.09% in India’s international trade during 2009-10

    • 10.69 % of India’s total imports were from China in 2009-10 (largest)

    • China is the third highest destination for India’s export accounting for 6.5% of the total

    • In 2009-10 total trade crossed $60 bn mark to reach $61.7 bn.

    • India’s exports: Iron ore, other raw materials, and cotton

    • India’s imports: finished goods, mainly machinery. There is a growing demand for Chinese telecom and power equipment’s

  • Set a target of reaching $100 bn trade by 2015

  • India has a trade deficit of over $20 bn with China

Addressing the Deficit Problem

  • India has been pressing China to provide better market access for Indian pharmaceutical and IT companies which have struggled to penetrate the Chinese market

  • India is pushing for reduction of restrictions on agri-products imposed by China so that India could export more agri-products to it

  • In his December 2010 visit to India Wen Jiabao said that China understands India’s concerns on the question of market access and would try to find ways of resolving them

Indian Companies in China

  • Manufacturing: pharma, auto components, laminated tubes, refractories

  • IT and ITES: IT education, software solutions

  • Banking

  • Ranbaxy, Orchid Pharma, Dr Reddy, Aurobindo Pharma, NIIT, Infosys, Suzlon, SBI, PNB etc

Chinese Companies in India

  • Power generation, machinery and infrastructure construction, electronics, IT and Hardware manufacturing

  • Sinosteel, Shougang, China Dongfang Internations, Sinohydro, Huawei, TCL, Haier,


Still-well highway

Cultural Relations

  • 1988: Agreement on Cultural Cooperation

    • Provides for an executive cultural exchange programme (CEP)

  • Latest CEP signed in 2010

    • Provides for cooperation in a gamut of cultural fields including exchanges of visits of performing artists, officials, writers etc

  • 2003: Centre for Indian Studies inaugurated in Peking University

  • 2008: 70th anniversary of Indian Medical Mission to China

    • Chindia organised Joint Medical Mission to commemorate the event

  • 2010: Festival of India in China

  • India’s stall at World Expo

  • Structure adjacent to White Horse Temple

    • Inaugurated by Patil

Indian Diaspora in China

  • About 39000 people

  • HK has a larger Indian presence

  • Mainly students

Table 4

Binders/Opportunities vs Separators/Challenges
Binders/Opportunities VS Separators/Challenges




Huge trade. Both are very large economies. Growth contributing to global recovery

<list out all major outstanding issues>

Int Fora

WTO – Doha round; Climate Change. At the world level fora, India-China cooperation is quite evident.

At local fora and regional stability, India China are at divergence


Overall cooperation

Both stand to gain a lot

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