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Global watch newsletter _ December 2015

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As two of the fastest growing emerging market economies, India and China together symbolize an economically vibrant Asia. Find out what China’s rapid economic growth implies for India, and more, in the December 2015 issue of the CII Global Watch.

Publicada em: Economia e finanças
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Global watch newsletter _ December 2015

  1. 1. FOCUS: CHINA As two of the fastest growing emerging market economies, India and China together symbolize an economically vibrant Asia. Both countries have experienced rapid economic growth outpacing average rates of growth of developed nations in recent years, with an upswing in trade and investment. They have also emerged as markets with huge untapped business opportunities. On account of their rapid economic progress and growing influence, both countries have also begun to assume significant roles in global economic issues in recent times. China and India have worked together to defend common economic concerns at the WTO, climate change negotiations at the aegis of the UN, and in the evolving global financial regulatory mechanism post the financial crisis. 01 Director General’s MessageINSIDE STORIES Message from Indian Ambassador03 Message from Chinese Ambassador04 Enhancing Indian Industry's Engagement with China Dr Naushad Forbes, President Designate, CII and Chairman, CII International Council 05 06 Policy Barometer09 Industry Voices12 CEO Speak: Dr Pawan Goenka Chairman, CII Core Group on China and President - Automotive & Farm Equipment Sector, Mahindra & Mahindra Ltd. DECEMBER 2015 Mr. Narendra Modi, Prime Minister of India at the India China Business Forum in Shanghai
  2. 2. The convergence of mutual interests at global economic multinational corporations production networks to forums serves as a conduit for smoother bilateral leverage Indian manufacturing for exports to China. This engagements and also deepens the necessity of will of course involve bringing in substantial changes in maintaining strong economic ties. Sino-Indian economic the manufacturing ecosystem in India, to make it globally cooperation is set to scale new heights in the aftermath competitive. of the recent high level visits of the Chinese President HE Mr Xi Jinping to India and Hon’ble Prime Minister Shri CII has been actively engaged in promoting Indo-China Narendra Modi to China. PM Modi’s visit to China in May business ties. The CII led CEOs delegation to China 2015 has imparted significant new dynamism and during the PM’s visit in May 2015, was extremely fruitful. momentum to Sino-Indian economic engagements. In the presence of the Prime Minister at the India-China New areas of cooperation are being embraced, including Business Forum in Shanghai, Indian and Chinese manufacturing, railways, industrial townships, etc, while companies exchanged 24 agreements for cooperation people to people linkages are being accorded high totaling US$22 billion. CII signed an institutional importance. agreement with the Provincial Government of Guizhou for promoting participation of Indian IT companies in local China is expected to play a growing role in the PM’s IT projects. CII also signed a tripartite agreement with signature economic initiative “Make in India”. China has Zhisland and Xifu, business institutions in China, for already pledged US$ 20 billion worth of investments in institutional cooperation in B2B engagements. India’s infrastructure sector over the next five years. China has also agreed to set up two industrial parks, one CII has a China Core Group, which focuses on building each in Gujarat and Maharashtra. The latest Sino-Indian commercial ties and B2B linkages with China through its initiative aims to raise bilateral trade value to the US$ 100 manifold initiatives. A Report on China prepared recently billion mark and the two sides have pledged to address at the aegis of the Core Group has made specific trade barriers through a task force. recommendations on leveraging opportunities with China. In order to provide further thrust to the economic The agreements on establishing a provincial partnership engagements with China, CII also recommends creation between Karnataka and Sichuan and sister-city of a special China Cell cum Knowledge Centre within the relationships between Aurangabad-Dunhuang, Prime Minister's Office or Ministry of Commerce and Chennai–Chongqing and Hyderabad – Qingdao are Industry with both Government and industry welcome gestures. Mr Modi’s announcement of participation, to direct and monitor the achievements of electronic visas for Chinese tourists to India has been the CII Core Group goals. another strategic takeaway. The India-China economic engagement will be one of the Coming to business specifics, India will need to engage most significant as the two large economies progress on with China with a definite economic agenda and push for their development paths. We must jointly leverage the specific actions for market access in certain identified huge opportunities and forge closer business sectors like IT services, pharmaceuticals, auto partnerships. components, tourism and entertainment. Around 18 sectors have been prioritized after detailed industry level discussions for Chinese FDI in areas under capital goods, specialty products, consumer goods and infrastructure. Interactions with Indian industry will help in Director General detailing sector specific actions to attract Chinese FDI in Confederation of Indian Industry these areas. India also needs to look at attracting Chandrajit Banerjee FOCUS: CHINA 02 DIRECTOR GENERAL'S MESSAGE
  3. 3. FOCUS: CHINA 03 MESSAGE FROM AMBASSADOR The landmark visit of Prime Minister Narendra Modi to China in May 2015, coming just eight months after the successful visit of President XI Jinping to India, has provided fresh impetus to the India-China relationship. The two leaders noted that bilateral relations are poised to play a defining role in the 21st Century in Asia and indeed, globally, and affirmed that this constructive model of relationship between the two largest developing countries and two major poles in the global architecture provides a new basis for pursing state-to-state relations to strengthen the international system. The all-round expansion of relations is particularly visible in our economic and commercial engagement as developmental partnership is a core component of our Strategic and Cooperative Partnership. India and China are two of the fastest growing major economies in the world today. Our bilateral trade has grown rapidly in the last decade with trade volume crossing US$70 billion in 2014. Chinese investments into India are poised for a major expansion as major projects have been announced recently and many more are in the pipeline. The Chinese economy too offers large potential for Indian exporters and investors across sectors and many Indian companies have established successful operations in China. Such two-way investment flows and enhanced access to the Chinese market for Indian products and services would help to balance the large trade deficit and make bilateral trade sustainable, Indian industry can plug into vibrant East Asian supply chains by leveraging ‘Make in India’ while Chinese companies may look into investing in India in alignment with their ‘ Going Global’ strategy. India with its large labour pool, big markets and investor-friendly environment welcomes Chinese companies in its infrastructure and manufacturing missions. I commend CII and its office in Shanghai for partnering with the Indian Embassy for building mutual synergies between businesses of India and China I believe that this edition of Global Watch is timely and provides valuable information and suggestions for further strengthening our economic engagement. H.E. Mr Ashok K. Kantha Ambassador of India to China
  4. 4. FOCUS: CHINA 04 MESSAGE FROM AMBASSADOR I congratulate the Confederation of Indian Industry on this issue of Global Watch which focusses on India – China Relations. Bilateral relations between India and China are poised to play a defining role in the 21st Century in Asia and indeed, globally. Profound changes are taking place in the global landscape, and the Asia Pacific is undergoing new developments. China-India relations, with growing breadth and depth, have gone beyond the bilateral scope and are acquiring increasing global significance. As major players, we must take up our due responsibility with a sense of purpose and mission. As ancient civilizations, we can and should leverage our potential and contribute our wisdom to regional and global development. Commercial and economic engagement has been a core dimension of the burgeoning relations between India and China, which have witnessed an all-round expansion in recent years. Bilateral trade has grown rapidly in the last decade with the aggregate touching $70 billion in 2014. The economic engagement is immensely diverse, dynamic and vibrant, with new sectors being added continuously, including renewable energy, telecommunications, and media and entertainment. We have only tapped the tip of the iceberg in terms of potential investment. Given the size of both economies and their global engagement, investments in particular can reach much higher levels in both directions and across all sectors. With growing passion, closer cooperation, and deeper mutual understanding, our relationship is poised for great success and mutual enhancement. H.E. Ambassador Le Yucheng Ambassador of the People’s Republic of China to India
  5. 5. FOCUS: CHINA 05 VIEWPOINT ENHANCING INDIAN INDUSTRY’S ENGAGEMENT WITH CHINA The India-China relationship in recent years has attracted global imagination, not least because both countries are demographically-dominant and large developing countries of Asia, grappling with common issues of poverty alleviation and development. The two economies have adopted different growth models - China, which commenced its reform journey ahead of India, has recorded impressive growth rates for more than three decades and India too is rapidly catching up. Inevitably, the economic relationship of the two giant nations has gathered momentum over the last decade. From just about $3 billion in trade at the turn of the century, the countries are now eyeing $100 billion worth of merchandise trade. However, the imbalanced nature of this engagement raises issues of sustainability. In this context, the summit-level engagements over the last year or so evoke hopes of a more sustainable trade trajectory. It is noteworthy that Prime Minister Narendra Modi and President Xi Jinping have met as many as five times in this period with two bilateral visits as also on the sidelines of multilateral meetings. Prime Minister Modi’s visit to China in May 2015 was a seminal opportunity to discuss economic engagement, and many new initiatives were decided upon by the two governments. Interestingly, the PM’s closed-door interaction with top Chinese companies is said to have been very encouraging, and we are seeing this translated on the ground as these large enterprises begin to develop their India strategies. In addition, at Shanghai, the PM addressed business communities of both sides, for which CII had organized a high-level delegation. Businesses from the two countries exchanged 26 agreements totaling $22 billion on this platform, including trade, investments and financing. A key outcome of the visit was the establishment of a task force that would address market access issues faced by Indian companies in their sectors of interest. Several policy matters have been pending with the Chinese government for protracted periods. For example, approvals for pharmaceutical ventures in China take a long time, raising costs for Indian investors, including for products that are already acceptable to the USFDA. In the IT sector, preferences for Chinese state- owned companies discourage Indian companies from applying for contracts. Encouraging signs of cooperation are visible in the agreements inked for railway cooperation, smart cities, and skill development. The Chinese government expressed desire to engage in India’s high-speed rail project and has already commenced training for railway personnel. It would also take up station modernization in India. For skill development, a university is proposed in India with Chinese expertise. The agreement regarding co-production of films was a major step forward. India’s media and entertainment sector enjoys vast viewership across the world, but is impacted in China due to restrictive policies for foreign films. The co-production agreement has already resulted in several film ventures being signed, and this would hopefully open up the market for more Indian films and television programs. Indian companies are challenged by the size and diversity of the Chinese market as well as language and regulatory issues. However, they would need to be much more active in China if the trade balance is to be redressed. With their successes in other markets, Indian companies can be confident about their operations in China as well. CII’s China office in Shanghai can be an excellent starting point and our China desk in New Delhi is ready to assist in every way. As the Chinese economy slows down and the Indian economy opens up, the two countries can embark on new economic cooperation paths. We look forward to a robust and well-rounded economic engagement with China in years to come. Chairman, CII International Council Naushad Forbes President Designate, CII and
  6. 6. FOCUS: CHINA 06 CEO SPEAK Need to Adopt a “China-Specific” Policy to Gain Greater Market Access in China Q. Could you share your views on the current patterns of India’s trade with China? A predominant feature of bilateral trade has been the rising trade imbalance with China which raises much concern. This also induces fears of cheap Chinese imports flooding the Indian market with adverse effect on local producers. In fact, Chinese imports have frequently been the target of anti dumping actions by India. There has been a rapid growth in bilateral trade between India and China over the past decade. Bilateral trade exhibited a very robust growth during 2003-04 till 2008-09, with remarkable average annual growth rate of 52.2% – years which were also marked by high GDP growth rates in India. Bilateral trade shrank in the aftermath of the economic crisis and has again picked up. In 2014, aggregate trade stood at $72 billion, of which China’s exports to India crossed $60 billion and India’s exports to China totaled $12 billion. Despite the pace, the trade engagement has been relatively small as a proportion of total trade in both countries. Imports from China constituted 13.5% of India’s total imports and exports to China constituted a low 3.8% of its total exports in 2014. The Chinese President Mr Xi Jingping’s recent perspective that the two countries should forge a batch of demonstration projects in areas such as infrastructure construction like railways and industrial investment, broaden cooperation in fields such as services trade, investment and tourism, and gradually realize a general balance and sustainable development of bilateral trade indicates that China is sensitive to India’s concerns over the skewed trade deficit. While concern regarding Chinese imports and bridging the trade gap assumes crucial significance, a closer analysis of the imports from China which are topped by items like electrical machinery and equipments etc. reveal that these imports have majorly been used by the Indian telecom industry and private power producers in India to meet domestic supply gaps. This also raises the issue of the necessity to address these supply constraints to reduce the overt dependence on imports. While Indian manufacturing needs a revamp, an option could well be to seek Chinese FDI in these selective areas. Regarding India’s exports to China, raw material like cotton, minerals and metals dominate the export basket. “Cotton” tops the list as China has a tremendous demand for raw cotton which cannot be met from its domestic supplies. Copper imports from India are also increasing due to China’s fast pace of urbanization and increased production of electric or hybrid cars. Of late, a gradual structural shift in India’s exports to China is also becoming evident with the rise in exports of items like electrical machinery & equipment which is one of India’s leading global exports. However, with the high domestic demand for raw materials in the Chinese economy, minerals, cotton and metals may well continue to be among the top export items from India in the near future. Exports to Interview with Dr Pawan Goenka, Chairman, CII Core Group on China and President - Automotive & Farm Equipment Sector, Mahindra & Mahindra Ltd.
  7. 7. FOCUS: CHINA 07 CEO SPEAK China are also not consistent with India’s global trade profile, where engineering goods, agricultural produce and pharmaceuticals have been making rapid strides. Q. What are the major road blocks which impede trade with China ? Indian exports face restrictive market access in China due to several non tariff barriers (NTBs). Technical standards, certification, food safety requirements, phyto sanitary measures, regulatory practices and regulations in terms of national treatment pose problems. In addition, procedures for product and corporate registrations, delays in obtaining import drug licences, customs procedures, re-inspection, packaging regulations, banking procedures for remittance are related hurdles. For Indian producers, these NTBs affect prospects of key export products like fruits and vegetables, non basmati rice, pharmaceuticals etc which have great export potential. The Chinese language also poses a problem for Indian traders. This situation could be easily remedied if the rules and regulations were published and updated in English. Moreover, Indian companies in IT, pharmaceuticals, media etc are encountering a lot of hindrances to get the requisite foothold in the Chinese market. These issues are not specific to Indian exporters but impact all China’s trading partners; Indian exporters must make greater efforts to tap the Chinese markets. Q. What are your suggestions for enhancing business partnerships with China? It is my understanding that India’s importance for China is likely to increase substantially in the future – both as a market and an investment destination with the need for China to diversify its export markets and the strategic and geo-political importance of Sino-Indian ties. We need to leverage this opportunity and firmly push for sector specific market access particularly in sectors like pharmaceuticals, auto components & light engineering, media and entertainment, tourism and IT services. A “China Specific Strategy” needs to be adopted for greater market access. Indian pharma players for instance need to focus on ‘differentiated generics’ and specific molecules which are not available in China but can be provided by Indian companies at competitive prices. Some of the Members of a CII CEOs Delegation at a luncheon interaction in Shanghai
  8. 8. FOCUS: CHINA 08 CEO SPEAK Q. Can you tell us something about CII’s current engagements with China? CII has been very proactive in helping to build business links with China. The CII China Core Group helms the spectrum of initiatives and our office in Shanghai is a nodal point for Indian and Chinese companies, undertaking key networking activities. CII has established institutional partnerships with over fifteen organizations and industry chambers in China including the China Council for Promotion of International Trade (CCPIT) and All China Federation of Industry & Commerce (ACFIC). CCPIT is CII’s major MoU partner in China and CII also works very closely with the provincial offices of CCPIT. The CII led CEO delegation to China during the visit of the PM in May this year, was a huge success. The deals signed during the PM’s visit involved major Indian industries from the Indian and Chinese side and covered a wide range of industries including electricity, steel, solar energy, port development and film production. CII takes part in trade fairs in China including the global services expo, while also inviting Chinese companies to its own exhibitions, seminars and conferences. CII also participated at the 2nd China Outbound Forum which was held during November 20- 22, 2015 in Sanya, Hainan, China. We are now strategically taking up cooperation between the states of India and the provinces of China as we believe that this localized interaction would be central to greater economic engagement going forward. challenges faced by Indian IT companies in China may be addressed through measures like identification of select pilot projects which can be jointly executed with Indian companies to showcase India’s technological expertise and commitment. Collaboration in development of a platform for collecting information may also promote business development. Improved IP laws will encourage Indian IT companies to bring proprietary products/ content to the market. Government to government exchanges in some cases may help to ease regulatory constraints. We need to coherently work both at the Government and Industry fronts to realise the opportunities. I have already mentioned the necessity of attracting Chinese FDI in select sectors. . Mr. Sumit Mazumder, President, CII greeting Mr. Li Keqiang, Premier of China
  9. 9. FOCUS: CHINA 09 POLICY BAROMETER Key CII Recommendations to Enhance India China Economic Relations The CII China Core Group has studied in detail the trade and investment engagement of the two countries. Observing that India’s imports continue to be dominated by high-skill and technology intensive manufacturing products and its exports by primary goods, it points out that China’s cost and pricing advantage with respect to India has climbed down in recent years and would continue to erode as costs in China rise. At the same time, India is likely to become an increasingly important market for China and its imports could rise to as much as $87 billion by 2018 from the current $60 billion. Attract Chinese FDI Around 18 high priority sectors have been identified for attracting Chinese FDI under the categories: Capital Goods and Machinery, Core Infrastructure, Consumer Products, Speciality Products and Commodity Products • For attracting Chinese FDI in the shortlisted sectors, a specific proposition for targeting key companies needs to be developed based on an understanding of the nature of ownership and its existing manufacturing network, calling for micro- targeting of companies • Further detailing on sector specific actions will be required in each of these sectors through interactions with the Indian industry. Push for sector specific market access in China across five identified sectors Pharmaceutical & Life Science • Indian Government may present a case to China for ‘fast tracking’ approvals of select molecules by reputed Indian pharma companies • Favorable pricing and hence lower healthcare costs for China can be emphasized • China can set up its drug approval agency in India to fast-track approvals
  10. 10. FOCUS: CHINA 10 POLICY BAROMETER Auto components and light engineering • India should focus on select components with design capability and price competitiveness • Companies could target specific Chinese OEMs with interest in sourcing from India • Indian companies can also target local Chinese auto component manufacturers within a JV partnership and look at supplying to both the Indian market and export to China. • The Indian government could include auto components in its Foreign Trade Policy schemes Media and entertainment • The two countries have signed a landmark co-production agreement and several films are already in advanced planning stage. Film companies could invest in relationship building in China through collaborative productions, selecting appropriate customised content, negotiating quotas and undertaking specific marketing campaigns IT Services • Substantial push from the Indian Government is required to get China to provide preferred access to Indian companies in SOE (State Owned Enterprises) • In addition, there needs to be improved awareness channels for SOEs to understand outsourcing knowledge and business process to reduce fear of layoffs • Indian IT companies must commit to invest in strategic initiatives in China • Chinese ministries like MOFCOM, MIIT, and MOST must participate in partnership initiatives taken by Indian industry bodies like NASSCOM and CII • Movement of Indian professionals to China: There are currently lengthy approval periods for visas (work permits). As cross-border business opportunities improve, we recommend shorter approval timelines and longer durations for work permit. To a greater extent, visa on arrival for Indian nationals travelling to China (and the inverse) would be appreciated. Tourism • China is one of the largest outbound tourist markets. India has agreed to provide Visa on Arrival facility, and is undertaking a Visit India Year in China in 2015 to promote tourism from China to India. Targeted marketing campaigns, partnerships with tour operators, and cultural events are being organized. Such efforts should continue at an accelerated pace, given the large numbers of tourists from China. Chinese Sovereign Wealth Fund • India should consider a sovereign-to-sovereign deal with China, inviting capital investment into long term (20+ years) infrastructure assets in India, preferably as equity • The return on such investment can be in Chinese currency terms, thus bypassing the US dollar risk, given that there are several long term infrastructure investment opportunities in India • Projects like Industrial Parks, Water Supply and Sanitation, Townships etc. could be identified • Such a capital flow can possibly also be routed through the multilateral BRICS bank.
  11. 11. FOCUS: CHINA 11 POLICY BAROMETER Set up a China Cell cum Knowledge Centre • A specific cell within the PMO or MOCI, including government and business representatives, may be considered to direct and monitor the achievement of targets and bilateral negotiations on key products. • The Cell will be responsible for implementation of the outlined actions emerging from ongoing deliberations between the Government and Core Group members • It would disseminate information about China – opportunities, challenges, business practices, taxation issues etc. • It may organise events which allow Indian and international executives with experience in working and dealing with Chinese business community to share their experiences • It would interface with the India Business Forum and the Indian Embassy in China to disseminate information about Indian businesses and brands • It could work on developing a program to have high quality interpreters, who are available to serve the Indian Business Community Drive changes in Indian manufacturing and infrastructure The Indian manufacturing ecosystem needs to be globally attractive for MNCs to leverage facilities in India for exports to China. A number of policies to strengthen the Indian business environment are needed and the Indian Government is actively taking these up. Besides this, specific China related policies may also assist deeper economic engagement. • Establish Chinese Investment Parks, possibly as JVs with their Industrial Park developers, as per specific needs of Chinese investors • Key Chinese companies can be targeted based on nature of ownership and existing manufacturing networks • A special cell can be established to encourage cooperation between the SMEs of the two countries. In this regard, CII has signed an agreement with Alibaba for enhancing participation of Indian SME in the Chinese marketplace. • India should enhance capabilities in Chinese language and China studies in general. Teaching of language for business interaction, translation and interpretation, documentation, etc. can be taken up at an accelerated pace. Youth and academic exchanges can assist in this effort.
  12. 12. FOCUS: CHINA 12 INDUSTRY VOICES Mr Cyrus Mistry Group Chairman, Tata Group Mr Satish Reddy Chairman, Dr Reddy’s Laboratories Ltd “Prime Minister Modi’s visit to China has redefined the economic partnership of the two largest and fastest- growing developing economies in the world. The Prime Minister personally took up matters of interest to industry, and as a result, sentiments on both sides are very positive. We welcome the announcement of a high-powered joint task force to address the issue of trade imbalance and to expand bilateral trade and investment. Recent policy measures and strategic direction by the government hold the promise of cooperation in areas including services, technology transfer, industrial parks and railways while MOUs signed by companies on both sides signify a new era in our economic relationship.” “India has made great inroads into the global pharma market and is exporting at competitive costs to advanced as well as developing countries, especially in generics. However, it exported less than $30 million worth of pharma products to China in 2014-15. Indian pharma players need to focus more on ‘differentiated generics’ for the Chinese market. Specific molecules with low competitive intensity and other high priority molecules need to be identified (eg. cancer drugs) in China. The Indian government should continue to take up fast-tracking of drug approvals for reputed Indian pharma companies already meeting USFDA standards. Chinese FDA should be invited to set up office in India to enable faster approvals of Indian facilities. This would help lower costs for Chinese healthcare providers and consumers.”
  13. 13. FOCUS: CHINA 13 INDUSTRY VOICES “India and China have agreed to set up two Investment Parks for Chinese manufacturing companies setting up operations in India. This is expected to help Indian industry, since many goods which are now being imported from China could be expected to be produced in the country, which in turn is expected to reduce the country’s trade deficit. Chinese companies evaluating their investment decision in these Parks will require world class internal infrastructure. Provision of such state-of-the-art infrastructure through private development will be a strong first step to demonstrate India's commitment to enable China to succeed in India.” Mr G M Rao Group Chairman, GMR Group “While Indian companies are able to migrate their international contracts with global multinationals in the Chinese market, they are slow in being able to access the domestic market. CII has taken up issues being faced by Indian IT companies in China, including limited internal movement of personnel and applying for contracts with SOEs.” Mr T K Kurien Chief Executive officer and Executive Director, Wipro Limited.
  14. 14. FOCUS: CHINA 14 INDUSTRY VOICES Mr. Dhruv Sawhney Chairman & Managing Director, Triveni Engineering & Industries Limited “Capital Goods sector is a vital part of the economy contributing significantly to manufacturing output and employment. While India may be lagging behind China in this area, there is immense potential for growth, especially in specific high value products with high engineering and design requirements. We need to better understand the requirements of Chinese customers and the niches where Indian players can serve China”. Mr Sunil Lulla Executive Vice Chairman & Managing Director, EROS international Media Ltd. “The Chinese film market is the second largest in the world and slated to cross the US market by 2017. With over 23,000 screens to showcase films compared to the 4,500 screens we have available to us in India today the China market has great potential. The few Indian films that have released there have shown great promise although the real benchmark is what the Hollywood films have been able to achieve in that market. However, the restrictions on number of international films that can be released in China is a number as low as 34 including Hollywood films. We recently signed collaboration deals with China Film Corporation, Shanghai Film Group and Fudan University, all three Chinese state owned companies to make Indo-China co-productions, cross promote respective films in both countries and share intellectual property. We hope to launch the first of the films within these deals in the coming year. This joint promotion of the India- China co production treaty of 2014, exploring collaboration on the film and television content front and providing necessary support to Indian industry to organize industry seminars, trade fairs and award ceremonies, in collaboration with relevant industry bodies in China, will help the industry to access the Chinese market better.”
  15. 15. FOCUS: CHINA 15 INDUSTRY VOICES S.N.Subrahmanyan Member of the Board and Sr. Executive Vice President, (Infrastructure & Construction), Larsen & Toubro Limited (Approved) “The Indian Government has embarked on an ambitious strategy to make railways a source of economic growth and has opened up many areas of railway Infrastructure to FDI. In this, we seek the partnership and expertise of other countries. We welcome the multiple areas of cooperation outlined by the leaders of the two countries during the recent high-level visits. These include boosting speed on Indian tracks, setting up a railway university, training for Indian railway personnel, and undertaking studies of high-speed rail projects." S. Sivakumar Group Head - Agri & IT Businesses, ITC Limited “One of the key opportunities is export of agricultural products from India to China. India has significantly expanded its exports of rice, wheat & wheat flour, tobacco, sugar, meat & marine products, and fruits & vegetables in recent times. At the same time, China’s imports of such products from the rest of the world have been increasing, now touching $100 billion annually. India could well cater to the Chinese market. However, China has been slow to accord Indian products the necessary phytosanitary approvals and permit Indian products to enter the market. The Chinese government should send a team to India and identify products that it can import competitively, while according the necessary market access permissions.”
  16. 16. FOCUS: CHINA 16 Source: World Integrated Trade Solution (WITS), World Bank, 2013; Asian Development Bank, Basic Statistics, 2015; China Statistical Yearbook 2014, National Bureau of Statistics, China FACT SHEET Table 1: Key Economic Indicators, China GDP Population Technology Nominal GDP (constant 2005) 5.27 $ Trillion 2014 Real GDP 10.36 $ Trillion 2014 GDP per capita 7,593.9 Current $ 2014 GDP Growth 7.40 % 2014 Inflation Rate 1.99 % 2013 Population 1,367.82 Million 2014 Annual Population Growth Rate 0.49 % 2009-2014 Population Density 142.53 Persons per sq. km of total surface area 2014 Cellular Subscriptions 88.71 Per 1,000 population 2013 Internet Users 45.80 Per 1,000 population 2013 Table 2: Key Trade Statistics, China Exports Total 2,209,000 $ Million 2013 Export Growth 7.8% Top Partners Imports Total 1,949,900 $ Million 2013 Import Growth 7.2% Top Partners Hong Kong 17% US 17% Japan 7% Korea 4% Germany 3% Other, partners 52% Korea 10% Japan 8% Other Asia 8% US 8% China 8% Other partners 58% • Coal • Motor Vehicles • Oil & Gas • Refrigerators • Cement • Air Conditioners • Steel • Washing Machines • Primary Aluminum • Television sets Key Industrial Goods 2013
  17. 17. FOCUS: CHINA 17 Figure 1: India's Exports to China, 10 Year Trend, $ Million Figure 2: India's Imports from China, 10 Year Trend, $ Million Source: Trade Figures, Ministry of Commerce & Industry, Government of India FACT SHEET 6,759 8,322 10,871 9,354 11,618 14,169 18,077 13,535 14,824 11,936 6.6% 6.6% 6.7% 5.0% 6.5% 5.7% 5.9% 4.5% 4.7% 3.8% 23.1% 30.6% -14.0% 24.2% 22.0% 27.6% -25.1% 9.5% -19.5% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% - 5,000 10,000 15,000 20,000 2005-6 2006-7 2007-8 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 India Exports to China ($ million) Share of India's Total Exports (%) Y-o-Y Export Growth (%) 10,868 17,475 27,146 32,497 30,824 43,480 55,314 52,248 51,035 60,410 7.3% 9.4% 10.8% 10.7% 10.7% 11.8% 11.3% 10.6% 11.3% 13.5% 60.8% 55.3% 19.7% -5.1% 41.1% 27.2% -5.5% -2.3% 18.4% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2005-6 2006-7 2007-8 2008-9 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 India Imports from China ($ million) Share of India's Total Imports (%) Y-o-Y Import Growth (%)
  18. 18. Source: Trade Figures, Ministry of Commerce & Industry, Government of India FOCUS: CHINA 18 FACT SHEET India's Exports to China, Top 20 Commodities, 2014 India's Exports to China, Top 20 Commodities, 2014 Sr No Commodity Exports % share Y-o-Y Growth ($ million) (2014) (2013-2014) 1 Cotton 2,278 19.10% -40.60% 2 Copper 1,891 15.80% 2.70% 3 Mineral fuels and oils 1,292 10.80% 26.30% 4 Organic chemicals 1,045 8.80% 13.80% 5 Salt, sulphur, lime and cement 621 5.20% -8.30% 6 Ores, slag and ash 524 4.40% -66.70% 7 Nuclear reactors, boilers, machinery, etc 500 4.20% 3.40% 8 Plastics 356 3.00% -36.10% 9 Electrical machinery and equipment 280 2.30% -7.40% 10 Animal or vegetable fats and oils 273 2.30% -7.10% 11 Inorganic chemicals 247 2.10% 116.90% 12 Feathers, artificial flowers, etc 163 1.40% -15.00% 13 Aircraft, spacecraft, etc 158 1.30% -61.60% 14 Leather and raw hides 153 1.30% 24.20% 15 Pearls, precious or semiprecious stones 148 1.20% 17.90% 16 Zinc 145 1.20% 47.30% 17 Iron & Steel 118 1.00% -63.30% 18 Fish and crustaceans 118 1.00% -37.40% 19 Oil Seeds, grains and fruit 118 1.00% 454.20% 20 Optical, photographic, medical or surgical instruments 112 0.90% -22.20%
  19. 19. Source: Trade Figures, Ministry of Commerce & Industry, Government of India FOCUS: CHINA 19 FACT SHEET India's Exports to China, Top 20 Commodities, 2014 India's Imports from China, Top 20 Commodities, 2014 Sr No Commodity Imports % share Y-o-Y Growth ($ million) (2014) (2013-2014) 1 Electrical machinery and equipment 16,742 27.70% 17.70% 2 Nuclear reactors, boilers, machinery, etc 10,144 16.80% 7.30% 3 Organic chemicals 6,327 10.50% 17.30% 4 Fertilizers 3,149 5.20% 63.60% 5 Iron & Steel 2,713 4.50% 177.90% 6 Plastics 1,711 2.80% 29.50% 7 Project goods 1,452 2.40% -31.70% 8 Articles of Iron or Steel 1,392 2.30% 14.20% 9 Pearls, precious or semiprecious stones 1,229 2.00% 29.30% 10 Optical, photographic, medical or surgical instruments 1,222 2.00% 17.10% 11 Vehicles, other than railway 1,165 1.90% 17.30% 12 Ships, boats, etc 1,122 1.90% 19.20% 13 Chemical products 793 1.30% 23.80% 14 Mineral fuels and oils 778 1.30% -7.10% 15 Furniture, bedding, lamps, etc 739 1.20% 23.40% 16 Inorganic chemicals 738 1.20% 7.90% 17 Aluminum and articles 714 1.20% 31.80% 18 Ceramic products 552 0.90% 30.10% 19 Textile fabrics, Textile articles for industrial use 511 0.80% 5.70% 20 Toys, games and sports articles 412 0.70% 12.20%
  20. 20. The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes. CII is a non-government, not-for-profit, industry-led and industry-managed organization, playing a proactive role in India´s development process. Founded in 1895, India's premier business association has over 8000 members, from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 200,000 enterprises from around 240 national and regional sectoral industry bodies. CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized services and strategic global linkages. It also provides a platform for consensus-building and networking on key issues. Extending its agenda beyond business, CII assists industry to identify and execute corporate citizenship programmes. Partnerships with civil society organizations carry forward corporate initiatives for integrated and inclusive development across diverse domains including affirmative action, healthcare, education, livelihood, diversity management, skill development, empowerment of women, and water, to name a few. In its 120th year of service to the nation, the CII theme of “Build India- Invest in Development, A Shared Responsibility”, reiterates Industry´s role and responsibility as a partner in national development. The focus is on four key enablers: Facilitating Growth and Competitiveness, Promoting Infrastructure Investments, Developing Human Capital, and Encouraging Social Development. With 66 offices, including 9 Centres of Excellence, in India, and 8 overseas offices in Australia, Bahrain, China, Egypt, France, Singapore, UK, and USA, as well as institutional partnerships with 312 counterpart organizations in 106 countries, CII serves as a reference point for Indian industry and the international business community. Confederation of Indian Industry The Mantosh Sondhi Centre 23, Institutional Area, Lodi Road, New Delhi – 110 003, India T: +91-11-45771000 / 24629994-7 • F: +91-11-24626149 E: info@cii.in • W: www.cii.in CII China Office Madhav Sharma, Chief Representative Confederation of Indian Industry Room No 11-A 47/49, Shanghai Mart, 2299, Yanan Road (West), Shanghai 200336 Peoples Republic of China T: +86-21-62360969 • F: +86-21-32283510 • E: ciichinarep@cii.in

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