Badi Soch: Indian firms should anticipate Chinese consumers’ demands to tackle trade deficit

Chinese premier Li Keqiang hopes to launch negotiations for a China-India Regional Trade Arrangement while promising greater domestic market access to Indian goods. As a first step, an MoU has been signed between the Pharmaceuticals Export Promotion Council of India and The China Chamber of Commerce to facilitate better access to the $151 billion Chinese domestic pharma market. This is an area where India has global standing, and hence is a good springboard for success in China.

But other sectors need to pull their weight too. The Chinese demand for Indian raw materials such as iron ore has reduced, while our demand for Chinese manufactured goods has grown, creating a trade imbalance. India must move beyond raw resources to value-added products and Indian corporations must think creatively about catering to the demands of Chinese consumers. This will certainly help lower the trade deficit that has grown from $1.1 billion in 2001-02 to $40.8 billion in 2012-13, on bilateral trade that rose from $2.1 billion to $67.8 billion during the same period.

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