| |
Indians make China their
business
By Indrajit Basu
KOLKATA - From fear to ambition, India's outlook
on the erstwhile enigma called China is changing pretty
fast. Even until a year back, India's industry sectors
were scared of invasion by cheap Chinese products, but
now, as the country gets ready for its first prime
ministerial visit to China - from June 22 to June 27 -
in nearly a decade, its industry is hoping that it will
give them an opportunity to invade a newly-found Utopia.
"We do not fear the Chinese anymore," said
Tarun Das, director general of the Confederation of
Indian Industry (CII), recently, commenting on the
industry lobby's expectations from Prime Minister Atal Bihari Vajpayee's
China visit. "Instead, the visit of the CII delegation
to China this month coinciding with the prime
minister's sojourn is an invasion of the Chinese market
by Indian companies."
While it is old news now
that having consolidated in the past few years Indian
companies have already started taking advantage of the
burgeoning Chinese economy, the hottest development
regarding China is that Indian companies are now eyeing
a stake in the country's economic success; China's
state-owned enterprises (SOEs) to be precise. "Our
members have decided to invest in China and are
seriously looking at investment opportunities. Their
target sector at the moment are state-owned enterprises,
which are being divested," said Gurpal Singh, senior
director of CII. He added that Indian companies are
interested in either joint venture or acquisition of
SOEs, mainly in the manufacturing and information
technology sectors.
The CII, in fact, is urging
its members hard to cash in on China's highly successful
and proactive "red-carpet approach" towards foreign
direct investment. "Indian companies seeking to set up
manufacturing operation in China should have no
difficulty making entry into the country," says Singh. A
stake in Chinese companies is likely to offer two
obvious advantages to Indian companies: one, access to
the vast Chinese market, and two, beneficial exposure to
the proven efficiency of the Chinese manufacturing
environment.
And, according to the CII, the
experience can lead to a situation where Indian
companies can service their established Indian market
share with products from China-located factories or,
hopefully, enhance the competitiveness of their Indian
operations by adoption and adaptation of cost-efficient
practices learnt in the Chinese environment.
Companies that are visiting China as a part of
CII delegation are not the only ones eyeing stakes in
Chinese companies; so are companies that belong to the
other two major industry lobbies, the Federation of
Indian Chamber of Commerce (FICCI) and the Associated
Chamber of Commerce and Industries). However, these
lobbies feel that concentrating on SOEs could prove time
consuming since their divestments involve security
issues and concerns of the Chinese administration, and
they are thus more interested in privately-owned
companies.
These organizations feel there are a
host of sectors for Indian companies to tap, like
telecommunications equipment, energy, medical equipment,
automotive parts, agricultural chemicals, plastics and
packaging equipment. China telecom, particularly mobile
telephony, offers tremendous potential for Indian
telecommunication businesses, says the CII, following
China's consent to enter the World Trade Organization
regime.
The Indian prime minister's visit is
also emerging to be a significant event for China as
well, which said that it is willing to step up bilateral
relations with India and expressed hope that an
effective method could be found to resolve their vexed
and long-standing border dispute. According to agency
reports, the Chinese side is willing to work with the
Indian side to expand cooperation in all fields of
bilateral relations to higher levels. "We believe that
so long as the two sides adhere to the five principles
of peaceful co-existence, enhance trust, expand
consensus, strengthen coordination, Sino-Indian
relations can go further," said Foreign Ministry
spokesman Liu Jianchao early this week, adding,
"Friendly relations and cooperation between the two
countries not only conforms with the common interests of
the two sides but also to peace and stability in the
region and the world at large."
Friendly
relations and cooperation, though, are already on the
move. For instance, Indian exports to China in the first
quarter of the current financial year grew briskly at 96
percent. Last year, Indian exports to China stood at
US$5 billion. Bilateral trade has also been on a rise.
The growth has prompted the industry association to
state that the $10 billion mark will be achieved in
2005, instead of the original estimate of 2010.
Moreover, several segments of Chinese business, such as
banking and retailing, are now reportedly open to
setting up shops in India.
But besides eyeing
stakes in China's success, Indian industry
representatives accompanying Vajpayee have other issues
on their agenda. Primary among them is the removal of
non-tariff barriers on Indian exports to China. "Indian
companies must move forward more aggressively as
changing regulations and economics open the window of
opportunity in China," said Sudhir Jalan , an
industrialist. "Indian companies should enter China's
market as soon as possible to best take advantage of
China's exponential economic growth."
Yet
another important agenda, according to the FICCI, is
formulation of a mechanism such as "the exchange of
tariff lines" between India and China, which would help
formalize nearly $2 billion of trade currently
undertaken through "unofficial" routes. "We have
suggested that governments of the two countries should
consider exchange of tariff lines similar to the Bangkok
Agreement. This will boost our official trade from $5
billion to $7 billion in one year without making much
effort," said Amit Mitra, secretary general, FICCI. The
Bangkok Agreement ratified by India, Bangladesh, the
Republic of Korea and Sri Lanka allows preferential
tariff concessions to products originated in any of the
four countries.
The FICCI has also suggested
that a Free Trade Agreement (FTA) should be considered
between the two countries. "China already has FTAs with
ASEAN countries, and India is looking at a FTA with
ASEAN as well, so, why can't India get into a direct FTA
with China?" queried Mitra.
Indian industry is
expected to take up its concern on the movement of
Chinese capital and manufacturing expertise into India,
which its feels faces a number of problems. The country
doesn't want that the Chinese should swamp India with
exports, but, like India, should commit financially as
well by investing in the country. "There should be
sustained efforts to make Chinese companies seeking to
expand understand that India is too large and
sophisticated a market to be serviced solely by exports
in the long run except in very limited products areas,"
says the CII. "On the other hand, it should be
emphasized that it is not difficult to claw into and
develop market share if manufacturing is done in India."
The Indian prime minister's visit may indeed
open many doors for the two countries, but what is most
significant is that it is leading to a new realization
that could have an immense effect on global trade - the
two countries together could form a powerful lobby to
address shared external interests. "Tariff barriers,
access to developed markets, environmental policy and
patent protection are major irritants in both countries'
relations with the rest of the world and coordinated
efforts between the two countries could generate greater
tangible success, with significant economic
implications," said the CII.
(Copyright 2003
Asia Times Online Co, Ltd. All rights reserved. Please
contact content@atimes.com for
information on our sales and syndication
policies.)
|
| |
|
|
 |
|
