India signs agreements with China to boost SME sector, reduce trade deficit
The Dollar Business Bureau | @TheDollarBiz The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has signed five MoUs with Small & Medium Enterprises (SMEs) of China with an eye to improve the SME sector in India and reduce India’s trade deficit with China. The MoUs were signed by Wu Xiaochun, Director General, SME Bureau China and ASSOCHAM’s Secretary General D.S. Rawat. ASSOCHAM says that the cooperation will promote and help the SMEs to exchange technologies and enter joint ventures (JVs) in several sectors including processed food, cosmetics, rubber, plastics, textiles, machines for garment industry, and small scale plants for consumer durables.
According to ASSOCHAM, enormous opportunities exist in agriculture products, and machinery for painting, plating and coating. India is also seeking greater access for Indian pharma and IT companies in the Chinese market. The move is expected to bridge the wide trade imbalance between India and China. China is India’s largest trade partner, and bilateral trade between the two countries stands at around $65.8 billion. However, India’s trade deficit with China is high at around $36.2 billion, which is about 27% of India’s total trade deficit.
ASSOCHAM says that the trade imbalance between the two countries can be reduced to sustainable levels through more exports from India to China as well as China’s investing in building manufacturing capacities in India. According to ASSOCHAM, China ranks 31st among countries contributing FDI to India, and FDI inflows from China into India currently stands at $575 million, compared to India’s FDI into China of $898 million. India has already signed MoUs with China on cooperation related to trade of fishery products, trade and safety of feed and feed Ingredients, export of buffalo meat to China, and IT.