China said on Wednesday it was “ready to take steps" to address a yawning trade deficit with India as both countries signed a slew of business pacts worth around $16 billion (Rs72,480 crore) on the opening day of Chinese Premier Wen Jiabao’s three-day state visit.

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The preliminary agreements, numbering 48, cover trade in farm products, power equipment, pharmaceuticals, metals and marine products, according to a list provided by the Confederation of Indian Industry. “The pacts are worth about $16 billion," said a spokeswoman for the industry body.

Investment pacts: Chinese Premier Wen Jiabao (right) with Union commerce and industry minister Anand Sharma at the India-China Business Cooperation Summit in New Delhi on Wednesday

Despite trade between the two sides expected to touch an unprecedented $60 billion in 2010-2011, “this represents only 0.2% of the world’s total", which is “disproportionately low", Wen said. He promised to take up the issue with Prime Minister Manmohan Singh on Thursday to chalk out ways to “substantially increase the trade volume and set a new target in this regard."

On the trade deficit that has been flagged as an area of concern by Indian officials including foreign secretary Nirupama Rao, Wen said: “China takes the trade imbalance seriously. We are ready to take steps to facilitate access of Indian information technology, pharmaceuticals and agricultural products to the Chinese market."

India’s trade deficit with China was close to $16 billion in 2007-08 compared with $1 billion in 2001-02, according to industry figures. India is trying to diversify its trade basket; raw materials make up 60% of exports to China, while manufactured goods form the bulk of Indian imports.

A feasibility study on a regional trade agreement had been completed and China looked “forward to the early launch of the negotiations process", Wen said. Though India and China were major investment destinations, mutual investments in each other’s countries totalled $700 million, which was low, the Chinese Premier said. He urged more direct flights between the two neighbours and listed energy, science and technology as new areas of cooperation.

India’s trade minister Anand Sharma said his government welcomed Chinese investment in manufacturing and infrastructure, the latter being an area where the government was hoping to garner $1 trillion between 2012 and 2917. “Stronger partnership (between India and China) is in the interest of Asia," he said, echoing Wen.

This is Wen’s second visit to India, the first having been in April 2005. It coincides with the 60th anniversary of the establishment of diplomatic relations between the two countries that have been mired in mutual suspicion mainly due to their long-running border dispute dating back to a brief, but bitter conflict in 1962.

China claims 90,000 sq. km of Indian territory in Arunachal Pradesh and occupies around 38,000 sq. km in Jammu and Kashmir, which India claims is its land. China also holds 5,180 sq. km of Indian territory in the part of Kashmir controlled by Pakistan. India regards this as territory illegally ceded to China by Pakistan under a 1963 pact.

India-China ties have been buffeted by other incidents as well. Earlier this year, India suspended defence exchanges when Beijing refused a visa to an army officer in charge of Kashmir. India and Pakistan claim the region in whole, though they administer it in parts. New Delhi has also been upset by China issuing stapled visas instead of the usual stamped ones to Kashmiris, a policy, officials say violates India’s sovereignty. Reports of Chinese firms engaging in infrastructure construction in the region of Kashmir administered by Pakistan did not go down well with India either. Wen travels to Pakistan from Delhi on Friday morning.

China, for its part, eyes the activities of Tibetan spiritual leader, the Dalai Lama, exiled in India since 1959, with suspicion. Hours ahead of Wen’s arrival, hundreds of Tibetan exiles wearing yellow T-shirts with slogans such as “Free Tibet Now" took to the streets of central Delhi, shouting “Wen Jiabao go back" and “Tibet’s independence is India’s security".

“We will shed our blood and give our lives for the freedom of our homeland," they chanted as armed police monitored the rally closely.

AFP contributed to this story.