Dissatisfied with China on Indian exports, govt issues strong demarche

For the first time ever, India has issued a demarche to China on an economic issue. The stern diplomatic protest follows the dissatisfaction over the lack of specific commitments offered by the Chinese government to facilitate export of Indian goods and services to the latter, which are increasingly coming under various restrictions.

The unusual move was taken by India at the conclusion of the meeting of the Joint Economic Group of the two countries in Beijing on Tuesday. The Indian commerce ministry handed the demarche to its counterpart in China listing specific items on which India expects China to take urgent action soon.

Unlike official negotiations where documents are exchanged in advance, the contents of a demarche are unknown to the other side, until it is delivered.

The Chinese were, according to sources, taken by surprise by India’s move. At the base of India’s concern is the sharp rise in trade deficit with China from $1.08 billion in 2001-02 to $ 22.05 billion on 2008-09, that both industry and government believe is exacerbated by the barriers the Middle Kingdom has imposed on exports from India. The Indian government’s move shows that it is very serious about correcting the trade imbalance between India and China. The country is India’s top trading partner.

When contacted, commerce secretary Rahul Khullar confirmed that such a demarche had indeed been delivered to the Chinese ministry of commerce. Recently the US has issued a demarche to China on the Google issue, but India has never pursued its trade dispute with any country to this extent.

According to government sources, the following sector specific issues are listed in the demarche. In order of priority, right at the top is the demand to ‘allow immediate market access for all the remaining 14 fruits and vegetables’ whose import from India is still restricted. Next, is a demand to ‘lift the ban on Indian export of de-boned and de-glanded bovine meat’ and to ‘clear the way for Basmati rice exports’ from India.

The demarche also demands “removal of ‘local content requirement’ and recognition of the international IPR registration regime in order to create favourable investment environment in wind/non-conventional energy”. Suzlon in particular has expresses serious concern about barriers in this sector.

India has also requested landing rights and uplinking facilities for Indian TV channels. Zee TV is very keen on access to China. The document also urges greater access for Indian films in the Chinese market.

In pharma, another industry which has repeatedly expressed concern about problems in China, the commerce ministry wants ‘complete removal of procedural bottlenecks which delay introduction of Indian drugs in Chinese market.’ India also wants China to ‘remove tariff and non tariff barriers on import of power plant equipment and allow sufficient export of met-coke every year, without imposing any export duties, to meet requirement of Indian industry.’

In terms of general, non-sectoral action, the government of India wants China to ‘encourage state owned enterprises in that country to source more value added goods from India.’