It is peculiar to the Indian Government functioning that the policy makers take too much time to implement a decision even they know that urgency is required. Indian Government knew fully well in the late nineties and in the first decade of this century that China has made deep inroads into the economy of the African countries and in many traditional places where India has been operating for long, China has crossed India in terms of making investments and conducting business. India was then too busy with its focus on Western markets and by the time, India became serious in making a big push to Africa, it was too late. China was well ahead with its cheap products and financial muscle to give funds to the giant infrastructure projects in Africa and also Latin America.

Now, the Indian side has woken to the urgent need of doing something concrete and implement it without delay. Prime Minister Dr. Manmohan Singh has made Mr. Anil Ambani the chairman of the India-China CEO Forum from the Indian side and all indications suggest that this CEO Forum led by the Indian corporate biggies who are doing roaring business with China, especially in the power sector, will make all efforts to expand the area of operations and take full advantage of making new inroads in the burgeoning Chinese market.

The move makes sense from the Indian side at a time when the United States economy has been hit once again by recession fears and the Euro zone countries are struggling hard to maintain the present pace of their respective economies. Indian exports rose by a record 82 per cent in July 2011 but the commerce ministry sources say that this pace is not sustainable as the impact of the latest crisis in global economy will have its impact on the pace of Indian exports from September itself and India will be lucky if exports register a growth rate of 20 to 25 per cent per month in the remaining period of the current fiscal.

This possibility of slowdown in the traditional markets of Europe and USA makes it imperative for India to tap new markets and China with its vast potential is ready next door. India-China trade which stood at over US$ 60 billion in 2010-11 with Chinese exports to India accounting for US$40 billion, has been growing at three –four times that of India-US trade for the last five years. China has a trade surplus of US$ 20 billion in 2010-11.If the Indian companies do not give a vigorous push in exports, by 2017,China will have a US$ 80 billion trade advantage which is a massive one taking into account the trade size between the two big Asian countries.

India’s task is now how to compete in the Chinese market in areas where India has got competitive strengths. India’s China plan stipulates that where the Indian and the Chinese products are not competitive, the duties have to be structured to bring more competition and where they are dependent on China, how to leverage the domestic advantage. For India, it is of prime importance to step up exports to China since that is easier in the context of the present global trade scenario and additionally, that will help in bringing about a balance in the burgeoning India-China trade. The Indian officials are worried at the composition of the trade basket since China sells value added machinery and equipment to India whereas India sells cheap raw materials. For instance for years, iron ore is exported by the Indian companies to China in bulk and in 2010-11, iron ore accounted for 46 per cent of total Indian exports.

India’s China plan also wants Chinese firms to invest in India and even use India as an export hub for the third countries. This is possible in respect of the power equipment sector. The size of the power equipment market in India is so huge that Chinese companies can very well set up few such plants with provision of both internal and export supplies. Chinese banks are flush with funds and for the new joint ventures, Chinese lending is easily available.

The implementation of this China plan for boosting trade and investment does not mean that India should ignore its strategic interests vis a vis China. Economic collaboration is one thing and that even helps in smoothening the political relations. But China has its geo political ambitions that come in conflict with India in many ways. Indian policy makers have to take care of that fully. China also uses the same policy towards USA. India has to be vigilant in respect of protecting its interests in the borders as also in the maritime waters of the Indian Ocean.

China is consciously strengthening its ties with its traditional ally Pakistan and slowly gaining more influence with the other South Asian nations. Apart from developing a port facility in Burma, China has invested in the developments of ports in Hambantota in Sri Lanka and Gawdar in Pakistan and has offered assistance to Bangladesh to develop its deep sea port in Chittagong. There is a logic behind this move by China which imports 70 per cent of its energy requirements. China wants to ensure uninterrupted access to energy supplies and these ports might be of help during emergency situation.

There are issues of energy security also. India can collaborate with China in strengthening trilateral energy security along with Russia and there is scope for making joint bids with China for oil exploration blocks in third countries. But this depends on whether China is really interested in such joint bids. India’s China policy needs pragmatic approach and clear vision. The stake is high and if the two leading Asian economies really collaborate with a sense of mission, it can have its profound impact on not only the Asian economy but also on the global economic revival. (IPA)