'Increase exports of value added primary goods to China'

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SME Times News Bureau | 31 May, 2012
Expressing concern over the increasing exports of primary goods like ores, minerals and the agri products to China, ASSOCHAM has said India must add value in primary products to fill increasing trade gap with the neighboring market.

Data analysis by ASSOCHAM reveals, China has emerged as the largest market for primary products like ores, minerals and the agri products accounting for about 45 percent of India's total exports to the neighboring country clearly throwing a warning that the countryâs basic wealth is being shipped to the Chinese manufactures, who are rather aggressive in value addition.

As much as about one-third of India's total exports to China comprised the ores and minerals in the fiscal 2011-12. While it looks quite high, the figure was alarmingly high in the previous years.

In 2010-11, 55 percent of Chinaâs total shipments from India comprised ores and minerals, mainly the iron ores. Needless to say, the domestic industry engaged in sectors like steel has been raising the issue rather seriously.

"After all, export of mineral resources sucks our natural resources leaving little for value-added manufactured products in the country," ASSOCHAM Secretary General D.S. Rawat said.

In the current fiscal of 2012-13 when the going is difficult in the global markets, the primary products could again account for the lion's share of India's shipments to China. While some measures like export duty on iron ores have been taken, India must push for increased exports of manufactured goods to the Chinese markets.

India suffers a big trade deficit with China and these three-four items, other than minerals and ores, can be used for bridging this gap. "A conscious effort must be made to decrease share of ores and minerals to China," Rawat said. Though it is a difficult task, given lack of markets for other Indian products in rest of the world, the country must take steps in this regard for the interest of longâterm security of these natural resources, said the ASSOCHAM secretary general.

The main trouble with India's economic engagement with China is a huge trade imbalance . Between April-January, 2011-12 (disaggregate official data for which is available), India's trade gap with China was a big USD 33 billion. Against imports of USD 48 billion, exports were mere USD 15 billion.

But for minerals and ores, India's exports to China would have been quite dismal, underscoring the need for shipments of the value-added products to the neighboring country.

While the industry, on its part, should be aggressive in finding market for the manufactured products to China, the government should step in ensuring that Chinese non-trade barriers are removed in products like chemicals and pharmaceuticals.

For restricting exports of raw material, exports duty can be raised so that it makes better sense for value addition within India, rather than shipping the ores and minerals to the Chinese markets, said ASSOCHAM in a press statement.