The 2nd India China informal summit held in Chennai brought hopes for the struggling agri exporters of India. The meeting was held to propose a balanced deal in the RCEP which seemed to be inclined towards China. President Xi Jinping promised India to decrease the trade deficit through joint mechanism. India China Trade Balance set to improve in the coming years.
Trade deficit
Trade deficit of India with China was about $53 billion in 2018-19. China’s contribution to India ‘s trade deficit was about 30% while it had 10% share of India’s goods trade.
Struggling Exports
Agricultural exports declined to such an extent that during period of April- August 2019, goods under APEDA witnessed a 16% decline in terms of dollar and 22% fall in cereal exports. APEDA supervises half of India’s farm exports. However, increase in sea food exports compensated drop in agricultural produce exports.
Ajay Shai, Director general, Federation of Indian Export Organisation, explained the causes for the decline in exports and expressed hope that the things would change in long run. Oil meal exports has declined drastically in the past few years.
Market experts point out the non-competitive attitude of India to be the root cause of these decline. The increase in MSP without considering the prices in the international market has out priced Indian commodities. In last four years, Indian government increased MSP on most of the agricultural commodities by 30%.
Good News for Indian Exporters
India China trade balance solution however brings some good news for Indian exporters. China has allowed access to many Indian farm products to its market.
China has started to import rice from India and experts say that the rice trade could further rise to USD 500 million.
Also, Dhampur Sugar, an Indian company, has signed a MOU with Chinese exporters for consignment of 50,000 tonnes sugar..
Prime minister, Narendra Modi thanked China for increasing imports of Indian commodities such as rice and sugar. Further stated that India is looking forward to fully utilizing the high-level economic and trade dialogue mechanism to promote a balanced and sustainable development of bilateral trade.