NEW DELHI: The government has identified three states for Chinese companies to set up industrial parks ahead of Prime Minister Manmohan Singh's visit to Beijing beginning Tuesday.
China is keen on investing in India, especially in agro-processing, tourism and manufacturing, and wants New Delhi to reciprocate. The two countries are targeting $100 billion in bilateral trade by 2015.
India's Department of Industrial Policy & Promotion (DIPP), the nodal body for foreign direct investment policy, has identified sites in Uttar Pradesh, Haryana and Andhra Pradesh where Chinese companies could set up such units. The government is hopeful that such a step will help narrow the trade deficit with China.
Chinese officials are expected to visit these sites after which a memorandum of understanding could be signed during Singh's three-day visit to the country. "The Chinese have shown interest and definitely want to invest in the country. After surveying the sites in Haryana and UP, they will decide on the future course as to how they want to move ahead," a DIPP official said, adding, however, that they are yet to spell out the sectors where they want to invest.
Last week, China's foreign ministry spokesperson Hua Chunying had said that China has agreed to engage in building industrial parks in India. "China stands ready to strengthen cooperation with the Indian side to expand the market for our respective businesses and to facilitate investments," she had said.
On Thursday, a Chinese delegation including representatives from China Development Bank, Department of Asian Affairs, and Chinese Academy of Agriculture and Engineeringhad met officials from the DIPP.
Experts say the move will give a leg up to Indian manufacturing and at the same time address the trade imbalance between the two countries. At the end of fiscal 2012-13, China's trade surplus with India stood at about $39 billion. "It will lead to investment-led trade. They could eventually start using India as a production base, as wages rise in China and the yuan appreciates. So the switch could happen," said Biswajit Dhar, director general of Research & Information System, a think tank.
Dhar said the trade imbalance could be addressed if instead of importing from their country, Chinese companies in the industrial parks manufactured in India and then exported the products.
India's main imports from China are machinery and power & telecom equipment while its major exports to the country include iron ore and other natural resources. To rebalance bilateral trade, the prime minister is expected to also ask his counterpart, Li Keqiang, to buy more from India and shift from natural resources to other value-added products.
Singh is also likely to suggest an India-China tie-up for trade into third countries.