Piyush Goyal, the Union Minister for Railways and Commerce & Industry, is known to be a tough negotiator when it comes to business. He made the Railways very efficient since he took over the ministry and brought Ujjwal DISCOM Assurance Yojana (UDAY) to overhaul the debt-ridden power distributors of various states.
Had a meeting with China’s Vice-Minister of Commerce, Wang Shouwen and discussed bringing a trade balance between the two nations, clamping down on market distorting trade practices and boosting Indian service exports. pic.twitter.com/sl8keLUSo6
— Piyush Goyal (@PiyushGoyal) June 11, 2019
No one can easily outsmart him when it comes to business. It has not even been a month since Piyush Goyal took over as Commerce minister and he assessed that China is being unfair to India in terms of trade. Therefore, in his meeting with the Chinese counterpart, Goyal raised the issue of trade imbalance between the two countries and also discussed boosting of Indian service exports. “Had a meeting with China’s Vice-Minister of Commerce, Wang Shouwen and discussed bringing a trade balance between the two nations, clamping down on market-distorting trade practices and boosting Indian service exports,” tweeted Piyush Goyal.
The Chinese businesspeople distort the invoices and keep the prices of products high on paper while actually selling the products at cheaper rates. Through this practice, they can claim subsidies given by the Chinese government on exports. The Indian consumers get cheaper products due to distorting by Chinese businesses but the Indian traders and manufacturers lose the competitiveness due to this practice. Piyush Goyal also raised this issue and slammed this practice by Chinese manufacturers which had the tacit approval of Chinese government authorities.
The government also plans to provide financial and regulatory support to MSMEs to make them competitive to Chinese businesses. In the second term, the prime focus of the Modi government would be to reduce imports and promote domestic manufacturing to make the country ‘factory of the world’.
India’s imports from China stood at $60 billion during the April-January period of the 2018-19 financial year, a decline of a significant 5% over the year-ago period, according to the PHD Chamber of Commerce. According to the chamber the trade deficit also eased to $46 billion in April-January 2019 from $53 billion a year ago. The data provided by the Commerce Ministry showed that India’s total export to China totalled $13.8 billion whereas India’s import from China stood at $60 Billion during the April-January period.
The Chinese economy has grown exponentially in the last four decades. It is still one of the fastest growing economies in the world. The economic growth of the country has been largely dependent on exports. It is the largest trading nation in the world with huge trade imbalances with countries across the globe. The trade war with the US and the wave against globalization are threatening the economic prospects of China. Most of the western liberal democracies have seen pro-protectionist movements against free trade. The huge trade deficits with China and their currency manipulation seem no longer acceptable to people and governments around the world.
However, India is still on the losing side in terms of trade with China. Previously, in a statement at the WTO India had cautioned China that the huge trade gap needed to be bridged with positive actions. In its statement during China’s trade policy review, India had pointed out that China needed to make efforts to ease Indian exports to the nation. Rice, meat, pharmaceuticals and IT products from India were the main subjects.
The Indian pharmaceutical sector can find a huge opportunity in China, with the expansion of the Chinese health program. Prime Minister Narendra Modi’s synergy with President Xi will surely aid this huge advance in the India-China trade which will further ease out the mammoth trade imbalance between the two Asian giants.