India Trade Agreement with China
India and China, two of the largest economies in the world, have a complex and often contentious trade relationship. Over the years, there have been several attempts to negotiate and implement trade agreements between the two countries. In this article, we will focus on the latest developments in India-China trade relations and the potential impact of the trade agreement between the two nations.
In 2020, India and China engaged in a border dispute that resulted in violent clashes between the armies of the two countries. This led to a strained relationship between the two nations, including their trade ties. India subsequently banned several Chinese apps and imposed stricter rules for Chinese investments in Indian companies. China, in turn, imposed import restrictions on Indian goods, particularly agricultural products.
Despite these challenges, both countries have continued to engage in talks to improve their trade relationship. In November 2020, the two sides signed the Regional Comprehensive Economic Partnership (RCEP) agreement, which includes China and 14 other countries in the Asia-Pacific region. The RCEP is expected to create the world`s largest free trade zone, covering about a third of the global economy.
The RCEP could potentially boost India-China trade as it will eliminate tariffs on most goods and services traded between the member countries. However, there are concerns that the agreement could negatively impact India`s manufacturing sector, which could struggle to compete with cheaper Chinese products. Additionally, the agreement does not address India`s trade deficit with China, which has been a major concern for Indian policymakers.
In December 2020, India and China held their ninth round of talks on the border dispute and agreed to disengage their troops from the disputed areas. This brought some hope that the two countries could move towards resolving their differences and improving their trade relationship.
In 2021, there have been further developments in India-China trade relations. In May, India announced that it had cleared 45 investment proposals from China, including those from companies such as Huawei and BYD. This signaled a slight easing of India`s restrictions on Chinese investments. However, it remains to be seen whether this will lead to a broader relaxation of India`s stance on Chinese investments and imports.
Overall, the India-China trade relationship remains complex and volatile. While the RCEP agreement presents opportunities for increased trade, there are also concerns about its potential impact on India`s manufacturing sector. The recent border agreement and the clearance of Chinese investments are positive developments, but it remains to be seen whether this will translate into a lasting improvement in India-China trade relations.