Large FDI from China way to address huge trade deficit: PM
Beijing: Expressing concern at the "unsustainable imbalance" in trade with China, Prime Minister Manmohan Singh on Tuesday welcomed enhanced Chinese investment and the proposal to set up an industrial park in India as a way to overcome the growing trade deficit.
"India faces an unsustainable imbalance in its trade with China. One of the ways of overcoming the trade deficit is for India to attract larger flows of Foreign Direct Investment from China," Singh, who is starting his three-day visit here today, said in an interview to official Chinese media.
Bilateral trade touched USD 66.5 billion last year, of which China's exports to India totalled to about USD 47.7 billion.
The burgeoning trade deficit has touched almost USD 20 billion amid declining Indian exports of raw materials like iron ore.
"We are happy that more Chinese firms are looking to India as an investment destination. During his visit to India, Premier Li (Keqiang) suggested that we look at the option of establishing a Chinese Industrial Park in India where companies and firms from China could cluster together," he said.
"We welcome this idea. Recently, a Chinese delegation visited India and had good discussions with our concerned officials. We have also shown them a few possible sites for a Chinese Industrial Park. We will work with the Chinese side in implementing the idea," he said.
To a question on the progress of the discussion of Regional Trading Arrangement (RTA) between China and India, he said the large trade deficit is causing concern in India.
Both countries asked their Commerce Ministers to explore the idea of RTA, for which some studies were conducted a few years ago, he said.
"I am sure the Commerce Ministers will continue to discuss this idea. But I must be honest that there is a great deal of concern in our industry, given the large and growing deficit in our trade with China. When conditions are more propitious and trade is more even, we will find it more feasible to discuss an RTA or an FTA between our countries," he said.
On China's offer to build High Speed Railways (HSR) in India, he said India has not yet taken a decision on building HSR.