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India Inc upbeat on prospects in China

New Delhi, June 21: India Inc is upbeat about the possibility of expanding business with China and feels there is a huge potential to export goods and services to India's northern neighbour.

A survey conducted by the Confederation of Indian Industry suggests that service sector in China offers tremendous opportunity to India. “The two countries can work together in the service sector including tourism and hotel industry, health care and educational services for technical education,” says the survey.

The survey also categorically points out that there has been a change in the nature of business between India and China. The focus was earlier on “trading, but it is now moving towards manufacturing”. Both Indian and Chinese companies have over the years grown to realise that they could reap more benefits by setting up joint ventures to service third countries.

Initially, Indian companies entered China lured by its huge hinterland market. Corporates were keen to take advantage of the low cost of capital, existing infrastructure and an overall business friendly environment.

However, while CII claims in its study that Indian companies have got easy licences within six months to set up shops or trade with China, a Ficci survey said, “Due to control of distribution and retail channels, many Indian exporters have found it difficult of penetrate the Chinese market.”

Stating the impediments in working with China, both CII and Ficci believe that language problems, lack of clarity regarding certain domestic regulations, red tapism, lack of local talent and lack of proper protection for intellectual property rights pose major deterrents to a healthy business relationship.

The top five categories of India’s exports to China have not shown much difference in terms of their percentage share in total trade over the last two years. Iron ore, other ores and minerals, plastic and linoleum, marine products and drugs and pharmaceuticals that accounted for 65.98 per cent of India’s total exports to China have had similar proportions in previous years.

It is to be noted that India and China have reached an agreement on the Bangkok agreement in February this year, under which China has agreed to provide tariff concessions to 217 items for Indian exporters with an average tariff reduction of 13.5 per cent.

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