China and India, the two giants of Asia, have been talking (unconvincingly) of the possibility of a bilateral free trade agreement for several years. A feasibility study was completed in October 2008, but there is much opposition from India’s business sector as well as many other political complications that are likely to keep the idea on a very low flame for a while.
last update: May 2012
Duty concessions offered to some auto components from China under the Bangkok Agreement from September 1 this year have led to Indian companies alleging dumping.
Security concerns over investments from China is impacting the proposed Bilateral Investment Promotion Agreement with Beijing. North Block’s proposal to amend the Foreign Exchange Management Act (FEMA) is stuck, delaying the signing of the agreement.
Noting that bilateral trade between India and China is not as vast as their economies, the China Council for Promotion of International Trade has called for expediting the process of a free trade agreement (FTA).
Commerce minister Kamal Nath’s position that a Free Trade Agreement (FTA) with China would not work until it becomes a market economy is not unreasonable.
I recall two incidents. One, a meeting with a senior functionary in the Chinese embassy in 2002. His comment: China’s main grouse with Pakistan after 9/11 was that they had allowed the US into our backyard. Second, the same year, at a seminar in JNU, a Japanese delegate was explaining why the Japanese were cutting aid to India-India’s nuclear explosion was difficult to justify to the paranoid Japanese public.
“To travel hopefully is a better thing than to arrive,” wrote noted English novelist Robert Louis Stevenson. For me, a free trade agreement (FTA) with China is something similar. A free trade agreement with China could be a final destination and we can travel hopefully to it.
Chinese Premier Wen Jiabao today announced the decision of India and China to institute a joint feasibility study on a Free Trade Area (FTA) Agreement between the two countries, having signed a landmark political accord to settle the lingering boundary dispute.
The government of India is set to initial a Bilateral Investment Promotion and Protection Agreement (Bipa) with China with the two pending issues on security and legal jurisdiction being sorted out by the National Security Adviser in the Prime Minister’s Office. A free trade agreement, however, looks distant with the domestic industry raising serious concerns.
why is China so keen on an FTA and India less eager?
Chinese Premier Wen Jiabao will propose to establish the world’s biggest Free Trade Area (FTA) between China and India during talks with the Indian leadership next week.