India and China are likely to announce the start of negotiations for a bilateral trade pact, during Prime Minister Manmohan Singh’s proposed visit to China later this year. China is India’s second-largest trading partner accounting for 7.7% of the country’s total trade of $361 billion (Rs15 lakh crore) in 2005-06.
The two sides already have a joint study group examining the possibility of a free trade agreement and is expected to submit its report in October, a month ahead of Singh’s scheduled visit.
“If the report is accepted, the two sides could allow the launch of negotiations during the Prime Minister’s visit,” said a senior commerce ministry official who did not wish to be identified.
A trade pact with China would cover goods, services and investments, since the country includes all three under its bilateral free trade agreements with other countries, the official said. Negotiations could, however, take as much as two years to conclude, the official said.
A team of Chinese officials would be visiting India in May to resolve issues pertaining to sanitary and phytosanitary (SPS)—food safety and plant health measures—requirements which are coming in the way of increasing agricultural export from India to China.
“Because of stringent SPS requirements, several consignments have been delayed or did not meet the Chinese requirements,” the official said. Some items which could benefit from relaxation of the SPS norms include pomegranates, grapes and tobacco exports, the official added.
Speaking at the launch of the United Nations Economic and Social Commission for Asia and the Pacific, Union commerce minister Kamal Nath said increasing the quantum of agricultural exports to China would be one way of decreasing the trade deficit between the two countries.
China currently allows only 20 agricultural items to be exported from India, the minister added.