India, China Expand Bilateral Trade Agreement

India and China are working towards a new comprehensive bilateral agreement that will expand trade relations between the huge, developing nations.

The joint economic group meeting held in Beijing addressed issues of increasing local stakes in Chinese projects in India and easing market entry for Indian companies in China particularly for in its IT and pharmaceutical industries. New Delhi wants Chinese projects in India to have more Indian participation after getting strict with employment visas issued to Chinese workers in the country last year.

In return, New Delhi has agreed to increase the number of foreign engineers and support staff allowed per Chinese project in India to 40. India-China trade suffers from a huge imbalance with India's annual exports to China worth US$11 billion while China's exports to India amount to US$27 billion. Trade deficit with China ballooned to US$16 billion last year from US$11.2 billion dollars in 2008.

Indian businesses cite China's tariff barriers of as high as 30- to 35 percent for the manufactured equipment industry as a hindrance to market entry with the same barriers in place for the agriculture industry. Custom procedures, standards, certification, regulatory practices and quantitative restrictions were also cited as problem areas in exporting goods to China by the Federation of Indian Chambers of Commerce and Industry.

"A balance of exports and imports is important, and surplus is sometimes difficult to deal with," India's Commerce Minister Anand Sharma was quoted by AFP as saying. "We have very frankly discussed all these issues and also the measures required to ensure that there is a balance between India and China's economic engagements."