‘PM's tour must focus on services exports to China’

 Himanshu Vatsa | The Dollar Business Indian business community seems to have high expectations ahead of Prime Minister Narendra Modi’s five-day trip to China, South Korea and Mangolia, beginning May 14. According to reports, Indian and Chinese private companies are expected to sign business deals worth US$ 20 billion during the prime minister’s visit. The Federation of Indian Export Organisation (FIEO), an apex body of exporters, has expressed hope that the trip will bridge the trade deficit between India and China. “If exports have come down to less than US$ 12 billion in this financial year from US$ 18-20 billion recorded two years back, that means something is wrong with our exports strategy towards China. And I think there has to be serious discussions on that matter,” said Ajay Sahai, Director General, FIEO. A major contributor to India's exports to China is iron ore, constituting more than 50% of total exports. But experts say that a number of items such as oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment and dairy products have the potential to increase India's trade with China. “We have to look at the value-added products which can be exported to China. Not necessarily only goods, even services also,” Sahai told The Dollar Business. Expressing concern over increasing trade deficit between India and China, Sahai said, “Our exports are declining and their exports are increasing. That’s a very serious consequence because your deficit with China is much more than one-third of your total deficit. That requires massive efforts.” On May 14, Modi will meet Chinese President Xi Jinping in his hometown Xian. The meeting will be followed by an official meeting between the two leaders in Beijing on May 15 and another interaction in Shanghai. Later, Modi is also scheduled to have discussions with top CEOs of Chinese firms. In South Korea, Modi is scheduled to meet a group of CEOs and visit the Hyundai Heavy Industries shipyard at Ulsan. Hyundai is keen to tie up with India’s state-run Hindustan Shipyards to overhaul the facility and jointly produce warships. The Korean major is also willing to join Modi’s Make in India initiative for manufacturing surface, submarines and container ships. Defence Minister Manohar Parrikar had already moved a proposal in this regard when he visited Seoul last month. According to the exporters’ body, the prime minister’s visit to South Kora will bring in more investments in the infrastructure sector. Since India and South Korea have already signed a Comprehensive Economic Partnership Agreement, India’s trade and investment with Korea will definitely go up in the next few years. “We will expect Korea also to look at investments in some of the infrastructure sectors, particularly ports and roads. If you are getting investment from these countries, it will help us in improving our infrastructure,” Sahai said. In Mongolia, Modi will address the country’s Parliament and sign an agreement that will allow India’s Border Security Force to train border guards of the country locked between China and Russia.    

May 11, 2015 | 6:50 pm IST.