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INDEX

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TOPICS
EXECUTIVE SUMMARY INDIA CHINA TRADE RELATIONS: OVERVIEW INDIAS TRADE WITH CHINA: TRENDS AND PATTERNS CHINAS TRADE WITH INDIA INDIAN IT EXPORTS TO CHINA POTENTIAL OF INDIA CHINA BORDER TRADE INDIAN MERCHANDISE EXPORTS TO CHINA THE FUTURE OF INDIA-CHINA TRADERELATIONSHIP BIBLIOGRAPHY

P.G NO. 3 5 7 12 16 17 18 19

EXECUTIVE SUMMARY
1. The two Asian giants and the world most populated nations, China and India, have registered outstanding growth performances in recent years. More importantly, their continued economic expansion has been much anticipated to help sustain world economic growth as economic prospect in the industrial world darkens. 2. For three decades, Chinas economy has grown by nearly 10% a year to become the worlds second largest measured in purchasing power parity terms. Between 2000 and 2006, China contributed 15% of the total increase in world GDP. Likewise, Indias economy has also grown rapidly in recent years, by more than 8% a year since 2003.

3. Trade has increased at a faster pace than the economy. Between 1978 and 2006, trade grew by 18% a year in China and its share in world export jumped from 1.4% to 7.6%. Indias trade has also increased rapidly, by 11% a year since 1978. Though its export share also went up from 0.4% to 1.2%, it is still a rather minor player in the world economy.

4. One would expect India to continue its growth in trade and economy, rendering the country a more significant role in the world, especially as Chinas future expansion may be constrained by rising costs. 5. Chinas trade restructuring has been more extensive, compared to Indias. Manufactured goods dominate Chinas trade while service trade is relatively more important for India. Substantial changes have also taken place in Chinas manufactured trade, from lowskilled labor-intensive goods to more capital and technology-intensive goods.

6. Such disparity is due largely to the important role of foreign direct investment (FDI) in China, enabling China to participate in the escalating regional production network and be closely integrated with neighboring economies.

7. Consequently, China is incurring increasing trade surplus, especially with the United States and European Union, mostly by foreign invested enterprises. On the other hand, China imports heavily from its neighbors and has accumulated large trade deficit with economies in East and Southeast Asia. 8. The outlook for Indias future trade expansion remains uncertain. Indias trade has experienced limited restructuring, while accumulating huge deficits. It continues to depend considerably on the export of primary goods and low skilled labor-intensive goods. Its service exports, such as software, are still quantitatively small. Moreover, India relies on imports of energy and resource goods, leaving it vulnerable to price hikes in the world market. 9. As FDI plays only a minor role, India has limited participation in Asias economic integration and production sharing. India in general still has a long way to go in terms of industrialization.

1. INDIA CHINA TRADE RELATIONS: OVERVIEW

India and China officially resumed trade in 1978. In 1984, the two sides signed the Most Favored Nation Agreement. India-China bilateral trade which was as low as US$ 2.92 billion in 2000 reached US$ 60.58 billion in 2011, making China Indias largest goods trading partner. In 2008, bilateral trade stood at US$ 40.8 billion and China became Indias largest goods trading partner, replacing the United States of America. By the end of 2009, as a result of the world, economic downturn, bilateral trade dropped to US$ 34.30 billion (a decline of 24.72%).However, in 2010 bilateral trade reached US$ 49.84 billion,

The overall bilateral trade figures for Jan-Oct, 2011 released by the China Customs are as follows: (All figures in US$ billions).

2009

2010

2011

India Exports to China Growth % China Exports to India Growth % Total India-China Trade Growth % Trade Balance for India

10.73 -42.38 23.57 -12.51 34.30 -24.72 -12.84

16.97 58.12 32.87 39.45 49.84 45.29 -15.90

18.89 11.34 41.68 26.82 60.58 21.56 -22.79

Highlights:

India-China trade for 2011 stood at US$ 60.58 billion, recording an increase of almost 22%. Indias exports to China for 2011 reached US$ 18.89 billion, a growth of more than 11% when compared to the same period in 2010.

Chinas exports to India for 2011 reached US$ 41.68 billion, recording an increase of almost 27% compared to Jan-Oct, 2010.

The trade deficit for India for 2011 stood at US$ 22.79 billion.

INVESTMENTS:Indian Investment in China

2006 USD 52 million 2007- USD 34 million in 78 Projects 2008- USD 257 million in 92 projects ( turnover realized was USD 88.1 million and the cumulative committed FDI from India into China in the projects till 2008 was USD 898 million in 426 projects)

2010- India's FDI in China- 77 Projects; investment of USD 55 million. Jan-Oct, 2011- India's FDI in China- 83 Projects; investment of USD 33.45 million Till Oct, 2011- India's FDI in China- 676 Projects; investment of USD 432.98 million

Chinese Investment in India

2007- USD 16 million 2008- USD 49.1 million (Cumulative investment till Dec 2008 was at USD 91.1 million) 2010- USD 33 million (Chinas non-financial investment in India) Jan-Oct, 2011- USD 50.77 million (Chinas non-financial investment in India) Till Oct, 2011- USD 298.75 million

2. INDIAS TRADE WITH CHINA: TRENDS AND PATTERNS

Indo-China trade has been growing very rapidly since mid-1990s. In 1994-95, Indias export to China was $254.3 million, which grew to $5344.88 million in 2004-05 registering an exponential growth of 35.60% per annum. The trend of Indias imports from China has shown a similar trend. Indias import from China was $761.04 million in 1994-95, increased to $6768.92 million in 2004-05, showing an annual exponential growth of 24.10%. Total trade between India and China touched $18 billion in 2005. Total trade between two countries has been growing at an annual exponential rate of 28.13% between 1994-95 and 2004-05, which is much higher than the rate of growth of Indias overall trade during this period. Even Indias exports to China have been growing much faster rate than its total trade, which roughly grew by 20% annually in dollar terms in the same period. Indias exports to China were $5344.88 million in 2004-05, registering an impressive growth of 80.39% compared to 2003-04, when it registered growth of 49.60% over previous year. This shows that Indias exports to China have been growing very rapidly and significantly but not to the same extent China exports to India. In the same period, growth of Indias overall export was only 26.15% and the share of China in Indias total export was 6.64%. Indias imports from China have also been increasing significantly over last ten years. Indias import from China was $6768.92 million in 2004-05 showing a growth of 67% over the previous year. Another significant trend is that trade deficit has also been increasing over the years, which stood at $1424.04 million in 2004-05 compared to $1101.04 million of the previous year. Trade deficit was $506.74 million in 1994-95, which has been increasing continuously. If the growth rate of Indias exports to China is maintained at the present level, it is expected that this gap will be narrowed down in the near future. As regards to Indias total trade (both exports and imports) to China, it was $12113.8 million in 2004-05, registering a growth of 72.85% over the previous year. Chinas share to Indias total trade was 6.39% in the same period.

Priority List of Imports by India's from China Electrical Machinery Machinery Plastic Organic Chemicals and Inorganic Chemicals Iron And Steel, Iron/Steel Products Rare Earth Metals Fertilizers Impregnated Text Fabrics Manmade Filament, Fabric Silk; Silk Yarn, Fabric Vehicles Mineral Fuel, Oil Etc Aluminum Out of total imports by India from China , 47% are of Electrical products, electronic products and machineries .Hence, there is huge potential in Indian market for other Chinese products .

Indian exports to china under the India china trade relations The principal items of Indian exports to China are ores, slag and ash, iron and steel, plastics, organic chemicals, and cotton. In order to increase the extent of exporting Indian goods to China, however, there should be a special emphasis on investments and trade in services and knowledge-based sectors. The other potential items of trade between India and China are marine products, oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment, and dairy products. Great potential also exists in areas like biotechnology, IT and ITES, health, education, tourism, and financial sector. The principal items of Indian exports to China Indian Exports to China is an integral part of the bilateral trade relations between the two Asian countries, India and china. Indian Exports to China focuses on mainly primary products. In 1984, India and China signed a trade agreement, providing for Most Favored Nation treatment, to foster greater cooperation between each other. Moreover, the year 2006 was celebrated as Friendship Year between India and China. The principal items of Indian exports to China comprise of ores, slag and ash, iron and steel, plastics, organic chemicals, and cotton. In order to increase the extent of exporting Indian goods to China, however, there should be a special emphasis on investments and trade in services and knowledge-based sectors. At present, iron ore constitutes about 53% of the total Indian exports to China. The other items that have potentials are marine products, oil seeds, salt, inorganic chemicals, plastic, rubber, optical and medical equipment, and dairy products. Not only this, great potential exists in areas like biotechnology, IT and ITES, health, education, tourism, and the financial sector - all of which will contribute to the services and knowledge based sectors. The need is to shift the focus from primary exports to the export of diverse range of high value added products, including

Auto engine components and automobiles Organic and inorganic products

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Pharmaceuticals Metal and metal based products like alloy steel bars and rods Agricultural products like grains, tobacco and oilseeds Engineering goods like diesel engines and compressors Marine foods Fresh and processed fruits and vegetables Medical and optical diagnostic equipment and laboratory equipment Consumer durables Textile yarns

Such diversification of Indian exports to China clearly indicates that there exists a steady demand for these products in the Chinese market. SN INDIAS TOTAL TRADE WITH CHINA- COMMODITY WISE DESCRIPTION Value in USD % Share %CHANGE MILLIONS 11/10 Oct 2010 Total Nuclear Reactors, Boilers, Machinery Etc.; Parts Ores, Slag And Ash Electric Machinery Etc; Sound Equip; TV Equip; Organic Chemicals Fertilizers Cotton, Including Yarn And Woven Fabric Thereof Iron And Steel Copper And Articles Thereof Articles Of Iron Or Steel Plastics And Articles There of Nat Etc Pearls, Prec Etc Stones, Pr Met Etc; Coin Optic, Photo Etc, Medic Or Surgical Instrments Etc 49838 8106 10248 7994 3892 1413 1521 2144 771 1155 997 744 738 Oct 2011 60577 10637 9223 9174 4685 2620 2004 1841 1840 1790 1514 1004 952 Oct 2010 100 16 21 16 8 3 3 4 2 2 2 1 1 Oct 2011 100 18 15 15 8 4 3 3 3 3 3 2 2 22 31 -10 15 20 85 32 -14 138 55 52 35 29

1 2 3 4 5 6 7 8 9 10 11 12

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13 Vehicles, Except Railway Or Tramway, And Parts Etc 14 Impregnated Etc Text FIndusabric; Text Art For Industry 15 Mineral Fuel, Oil Etc.; Bitumin Subst,Mineral wax

644

859

33

603

726

20

546

690

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INVESTMENTS:Indian Investment in China

2006 USD 52 million 2007- USD 34 million in 78 Projects 2008- USD 257 million in 92 projects ( turnover realized was USD 88.1 million and the cumulative committed FDI from India into China in the projects till 2008 was USD 898 million in 426 projects)

2010- India's FDI in China- 77 Projects; investment of USD 55 million. Jan-Oct, 2011- India's FDI in China- 83 Projects; investment of USD 33.45 million Till Oct, 2011- India's FDI in China- 676 Projects; investment of USD 432.98 million

Indian Companies in China With the growth in bilateral trade between India and China in the last few years, many Indian companies have started setting up Chinese operations to service both their Indian and MNC clientele in China. Indian enterprises operating in China either as representative offices, Wholly Owned Foreign Enterprises or Joint Ventures with Chinese companies are into manufacturing (pharmaceuticals, refractoriness, laminated tubes, auto-components, wind energy etc.), IT and IT enabled services (including IT education, software solutions, and specific software products), trading, banking and allied activities. While the Indian trading community is primarily confined to major port cities such as Guangzhou and Shenzhen, they are also present in large numbers in places where the Chinese have set up warehouses and wholesale markets such as Yiwu. Most of
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the Indian companies have a presence in Shanghai, which is Chinas financial center; while a few Indian companies have set up offices in the capital city of Beijing. Some of the prominent Indian companies in China include Dr. Reddys Laboratories, AurobindoPharma, Matrix Pharma, NIIT, Bharat Forge, Infosys, TCS, APTECH, Wipro, Mahindra Satyam, Dr. Reddys, Essel Packaging, Suzlon Energy, Reliance Industries, SUNDARAM Fasteners, Mahindra & Mahindra, TATA Sons, Binani Cements, etc. In the field of banking, ten Indian banks have set up operations in China. State Bank of India (Shanghai), Bank of India (Shenzhen), Canara Bank (Shanghai) and Bank of Baroda (Guangzhou), have branch offices, while others (Punjab National Banks, UCO Bank, Allahabad Bank, Indian Overseas Bank, Union Bank of India etc.) have representative offices. Apart from PSU banks, private banks such as Axis, ICICI also have representative offices in China.

Impediments for Indian exports to china There are certain obstacles faced by Indian exporters in their attempts to capture the markets of China. Lack of information on customs procedures, imposition of excessive customs and other levies with frequent rate changes, complex customs valuation procedure, absence of a specified nodal agency, lack of transparency regarding technical standards, differentiated testing norms for imported and domestic products, unfamiliarity with regard to provincial rules and regulations, and frequent change in policies without any advance information on those changes are just some of those problems.

3. CHINA S TRADE WITH INDIA

Chinese exports to india Chinese exports to India focuses on resource based exports as well as the exports of manufactured products. China has emerged as a global manufacturing center and India as the most lucrative market in the world. In 2004, the Chinese exports to India stood at US$ 5926.67 million. However, it industrialists in India were not in favor of China being given free access to the domestic markets. But bilateral trade relations between India and China have increased over the years, reaching

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US$18.7 billion in 2005 from US$ 4.8 billion in 2002. However, the bilateral trade is to be increased further to US$ 20 billion by 2008 and further to US$30 billion by 2010. Priority List of Imports by China from India Machinery Plastic Ores, Slag, Ash Iron And Steel Metals Organic Chemicals Salt; Sulphur; Earth, Stone Inorganic Chemicals; Rare Earth Metals Cotton and Yarn, Fabric Copper and Articles Thereof Electrical Machinery Hides And Skins Artificial Flowers, Feathers Tanning, Dye, Paint, Putty Precious Stones
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 Fish And Seafood Whereas, 76% to 80% of total exports by India to China consists of Ores, Slag, Cotton, Yarn, Fabric; Precious Stones, Metals, Artificial Flowers, Feathers and hides, Copper Articles and skin

The figures of trade between 2001 to 2008 speaks the rest of the story and also reflect what is the potential of trade between these two countries in coming years as both the countries are committed to increase the trade.

Chinese exports to India under the India china trade relations The main items that comprise Chinese exports to India are electrical machinery and equipment, cement, organic chemicals, nuclear reactors, boilers, machinery, silk, mineral fuels, and oils. Value added items like electrical machinery dominates Chinese exports to India. This exhibits that Chinese exports to India are fairly diversified and includes resource-based products, manufactured items, and low and medium technology products. It is said that if India is to capture the markets of China and enjoy profits, then it would have to discover new merchandise and branch out its exports to China.

The main items to be exported from China to India The main items to be exported from China to India are electrical machinery and equipment, organic chemicals, nuclear reactors, boilers, machinery, silk, mineral fuels, and oils. Value added items also dominate Chinese exports to India, like machinery, especially electrical machinery, which forms about 36% of Chinese exports to India. Chinese Investment in India

2007- USD 16 million 2008- USD 49.1 million (Cumulative investment till Dec 2008 was at USD 91.1 million)
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2010- USD 33 million (Chinas non-financial investment in India) Jan-Oct, 2011- USD 50.77 million (Chinas non-financial investment in India) Till Oct, 2011- USD 298.75 million

Chinese Companies in India According to information available with the Embassy of India, close to 100 Chinese companies have established offices/operations in India. Many large Chinese state-owned companies in the field of machinery and infrastructure construction have won projects in India and have opened project offices in India. These include Sino steel, Shougang International, Baoshan Iron & Steel Ltd, Sany Heavy Industry Ltd, Chongqing Lifan Industry Ltd, China Dongfang International, Sino Hydro Corporation etc. Many Chinese electronic, IT and hardware manufacturing companies also have operations in India. These include Huawei Technologies, ZTE, TCL, Haier etc. A large number of Chinese companies are involved in EPC projects in the Power Sector. These include Shanghai Electric, Harbin Electric, Dongfang Electric, Shenyang Electric etc. Chinese automobile major Beijing Automotive Industry Corporation (BAIC) has recently announced plans to invest US$ 250 million in an auto plant in Pune. TBEA a Xinjiang-based transformer manufacturer has firmed up plans to invest in a manufacturing facility in Gujarat. During the visit of Premier Wen to India, Huawei announced plans to invest in a telecom equipment manufacturing facility in Chennai. RECENT DEVELOPMENTS REGARDING CHINESE EXPORTS TO INDIA.

In the beginning, Chinese firms were keen on exporting cheap electronic items, garments, and toys to the Indian markets. But recently, Chinese exporters have been focusing on the cement market. Two Chinese cement companies, Yingde Dragon Mountain Cement company Ltd. and LongkouFanlin Cement Company have been authorized to sell cement in Indian market. The reasons behind the sudden interest of the Chinese cement companies in penetrating the Indian market are that China is the world's largest cement producer and that the per capita cement consumption is relatively low in India - around 150 kilogram per annum, less than one-third of China's per capita consumption, as in 2006. An Ahmadabad-based textile company is acting as the local agent of the Chinese firms in

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India.

The prospects for Chinese exports to India have been enhanced from 2006, with the opening of the prospective Indo China border trade. Trade has been initiated between Tibet, an autonomous region of China, and India through Nathu La Pass, reopened after 44 years. From then onwards, nearly 15 items are being exported from China to India.

4. INDIAN IT EXPORTS TO CHINA

Indian IT Exports to China is an integral part of the total Indian exports to china, with the bilateral trade between the two countries amounting to US $ 11.3 billion during the year 2005 which under joint efforts is to be increased to US$ 20 billion or higher by the year 2008. The bilateral trade has significant growth potential in areas like IT and ITES. Regarding the Indian IT Exports to China, the recent laws of china on restricting the foreign software companies selling software in China has been a setback for Indian software companies. The cordial bilateral trade relations however will soon ease out such tensions and there is a great possibility that Indian software companies will be allowed to sell software services to Chinese companies. Indian IT Exports to China has become a new bridge between the two countries facilitating the growth of bilateral trade and co-operation between the two countries. Not only software products, the Indian software companies also export IT- based know-hows to the Chinese software firms. Chinese officials and executives of almost all major Chinese software companies travel to the Silicon Valley of India or the city of Bangalore in order to learn the essence of India's software industry. Many Indian software firms under the Confederation of Indian Industries signed a Memorandum of Understanding with the Shanghai-Pudong Software Park of china to promote Indian and Chinese co-operation in software. Moreover in order to accelerate the Indian IT Exports to China many Indian software firms have moved into the park.

Some of the major Indian software houses like NIIT, Mphesis, Infosys, Satyam, and Tata
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Consultancy Services have been outsourcing in China. They on one hand in an advantageous position due to their superior traditional skills in terms of management compared to the weaknesses of Chinese developers. Moreover with the help of the local and language-specific expertise of Chinese professionals, the Indian firms can capture the Chinese domestic market as well as other ones in the fareast Asian countries. Moreover the conducive conditions of china like the upcoming opportunities in China, her economic growth, political stability, and human resources makes China an ideal place for establishing a second global delivery center for Indian software firms.

5. POTENTIAL OF INDIA CHINA BORDER TRADE

Potential of India China Border Trade is the recent development in the bilateral trade relations between India and china, marking the future prospects of trading for both the nations. The India China Border Trade started in 2006, between Tibet, an autonomous region of China, and India through Nathula Pass, which was reopened after a long gestation period of 44 years. It was decided that the Potential of India China Border Trade would facilitate export of 29 commodities from India to china and import of 15 commodities from china to India.

Potential of India China Border Trade : Overview The interaction between the two nations are to be seen in various levels like the political, military, academic, media, sports, culture, and economic. The Potential of India China Border Trade has been another benchmark in the bilateral relationship. China and India under their joint efforts will formally reopen the Nathula trade markets and the border trade passes under the great Potential of India China Border Trade. This is regarded as the most important yard stick for the Sino-India relationship as well as an important event of China-India Friendship Year.

Background of the Potential of India China Border Trade: The Potential of India China Border Trade was initiated in the year 2003, with the Chinese and Indian governments signing of the Memory of Understanding on the Expansion of
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Border Trade. Under this it was agreed upon that the border markets through Nathula Pass would be opened for trading. The delegation from the Indian Ministry of Commerce and Industry visited Tibet, an autonomous region of china to discuss the specifics. The Potential of India China Border Trade would promote the trade cooperation and the development of the bilateral relations between the two nations.

Profits from the Potential of India China Border Trade: The Nathula border trade markets be beneficial to the border inhabitants in both countries, India and china along with promoting local receptiveness and development. Moreover the Potential of India China Border Trade also enhances to motivate and pioneer a new channel for the upcoming China-India trade relations. It is believed that with the passing of time the Nathula border trade markets will grow and boost the China-India friendship bond, increasing the cooperation and common prosperity. Not only this, in future it will in fact serve the interests of peoples of both the nations and earmarks an important step towards the final solution of the long-standing boundary question.

6. INDIAN MERCHANDISE EXPORTS TO CHINA

Indian Merchandise Exports to China is another important segment of the total export of Indian products to china. The export items concentrated on primary products, however there lies a great potential for export of other value added and knowledge based items from India to china. The bilateral trade is under the regulation of the India and china. Major items of Indian Merchandise Exports to China: The primary products that comprise the Indian Merchandise Exports to China are like iron ores, slag and ash, iron and steel, plastics, organic chemicals, and cotton. However at present, Iron ore constitutes about 53% of the total Indian Merchandise Exports to China. The other merchandise items that has potentials are like the auto & auto components, electronic components, drugs & pharmaceuticals, metal & metal based products like alloy steel bars and
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rods, engineering machinery like diesel engines and compressors, textile yarns & fabrics, agricultural products like salt, grain, tobacco, and oilseeds, minerals & mineral products, fresh and processed fruits, vegetables, marine products, dairy products, medical equipment, and construction material. Such diversification of Indian Merchandise Exports to China clearly indicates that there exists a steady demand for these products in the Chinese market.

Impediments regarding the Indian Merchandise Exports to China: However there exists certain hindrances regarding the enhancement of the Indian Merchandise Exports to China like lack of informations on custom procedure in China as the language acts like a principal barrier, imposition of excessive customs and other levies with frequent rate changes, customs valuation procedure being complex, in absence of a specified central agency getting complete informations on rules and regulations is difficult, lack of transparency regarding technical standards, differentiated testing norms for imported and domestic products, and certain legal and regulatory problems within Chinese economy. Steps for enhancing Indian Merchandise Exports to China: In order to increase the levels of Indian Merchandise Exports to China, some steps are taken by the government as well as the respective industrial houses. Some of them are like to set up a joint council between the governments of two countries to resolve problems, to set up offices of trade promotion bodies in Shanghai & Beijing, to strengthen direct transportation links such as those facilitating the shipping, increasing frequency of the flights from India to important cities of China, to lent support industry in order to exhibit India in China through frequent industrial meets and exhibitions in different provinces, to encourage public sector banks to start their banking services in major cities of China in order to cater Indian businesses, and also initiate a separate export promotion scheme for China.

7. THE FUTURE OF INDIA-CHINA TRADERELATIONSHIP:Economic ties between India and China are rapidly emerging as one of the most important bilateral relationships in the world. Trade between the two countries has grown very robustly.
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Each country's aggregate international trade is expanding by 23-24% annually. It is likely that India-China bilateral trade will in 2012 surpassed $100 billion, driven by the surge in Indian imports of Chinese telecom and power generation machinery after adjusting for partner GDP (i.e., bilateral trade divided by the trading partner's GDP), India's trade with China is greater than that with Japan, the US, or the entire world. After similar adjustments, China's trade with India is only slightly below that with Japan, the US, or the entire world.

China already is (or will shortly become) India's number one trading partner. From China's side, India already is one of its top ten trading partners. Also, China's trade with India is growing much faster than with any of the other nine. Thus, India is rapidly becoming an increasingly important trading partner for China.

Even if the growth rate in India-China trade slows down to 25% annually (a conservative projection) from the current rate of over 50%, bilateral trade between them will be almost $225 billion in 2020, i.e., as large as China-US trade just three years ago. These are very large numbers. Political and business leaders need to start getting ready now for this radically different world.

In an increasingly flat world, trade between two countries should be a multiplicative function of their GDPs. Since it is almost certain that, by 2050, China and India will be the two largest economies in the world, it is inevitable that bilateral trade between them will become the most important economic relationship in the world.

India's political and business leaders have always responded with vigour to external economic pressures and competition. Look at the country's response in 1991. Or, look at the accelerated pace with which India's IT giants are globalising their footprint and moving up the value chain in response to an appreciation of the rupee and growing competition from other countries.

In any discussion of the growing economic integration between India and China, it is important to remember also that trade is only one of the two major economic ties that bind nations. The
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other is investment. At present, investment links between the two countries are relatively modest. Haier and Huawei have significant presence in India. Similarly, Bharat Forge, TCS, and Infosys are building a noteworthy presence in China.

These types of greenfield investments will continue to grow. However, the quantum leap will come as some of the bigger companies from India and China acquire third-country companies that already have a significant presence in the other country (e.g., if an Indian auto company were to acquire a western auto company with significant presence in China). It is certain that, over just the next five years, we will see a growing number of foreign acquisitions by Indian and Chinese companies. As these acquisitions materialise, it is inevitable that investment linkages between India and China will grow rapidly.

The world is watching the rise of China and India with fascination and awe. However, most people do not realise that the implications of tighter economic links between the two could be even more profound.

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BIBLIOGRAPHY:-

BOOKS:-

1. Strengthening China's and India's trade, By Miria Pigato, published 2006

2. China-India relations: contemporary dynamics By Amardeep Athwa

WEBSIDES:-

1. http://www.indianembassy.org.cn/DynamicContent.aspx?MenuId=3&SubMenuId=0 2. http://bombay2.mofcom.gov.cn/aarticle/bilateralcooperation/inbrief/200412/2004120001 0319.html 3. http://www.mea.gov.in/mystart.php?id=50042452 4. http://blog.made-from-india.com/Trade_relations_between_India_and_China-22.html 5. http://en.wikipedia.org/wiki/Sino-Indian_relations

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