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    Study of Comparison between

    Indian and China Economy

    Submitted to : Submitted By: Ritika Bansal

    External Mentor :Ms. Parul mam Roll no.35

    Internal Mentor :Ms. Palak Gupta Course:PGDM (IB)

    Submitted in the partial fulfilment for the requirement

    of Post Graduate Diploma in Management


    Jagannath International Management School

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    The MENTORSHIP program was designed in such a way that it provided a full

    learning opportunity throughout the program. I would like to express my gratitude

    towards all the people who guided me throughout the program and their direct or

    indirect help was priceless for me, without their guidance and support this project

    would not have been completed successfully.

    I express my sincere gratitude to NEELAM MAM (Jims) to guide me which all

    parameters I should consider.

    There was a great learning from my team who not only behave in a co-operative

    manner but also provide constant help in the completion of the project, thus, I

    thank to my each team member in the mentoring program.

    Last but surely not the least, I am very much thankful to my faculty guide, Ms.

    PALAK GUPTA (INTERNAL MENTOR) core faculty atJagannath International

    Management School, for her continuous guidance and support from the

    proceeding of the project to its completion. I cannot think of the accomplishment of

    the project without her assistance and guidance.

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    INSTAPOWER, a TUV certified ISO 9001 & 14001 organization, has been a

    leading name in power electronics for over two decades. Promoted by an

    alumnus of IIT Delhi, Instapower is recognized as an R&D house by the

    Department of Scientific and Industrial Research, Government of India. TheBureau of Energy Efficiency, Govt. of India, recognizes Instapower as an ESCO


    Instapower is the largest manufacturer of LED Aviation Obstruction lights in India

    and has over 100,000 aviation lights installed in India and other countries. It has a

    range of aviation products that are approved by ICAO (Canada), Airports

    Authority of India and Department of Civil Aviation-Malaysia.

    Instapowers vast product range is well accepted by various government, semi-government organizations / institutions and private companies and has received

    satisfactory performance test certificates from them. The key client list comprises

    of such names as RDSO, CPWD, DDA, BSNL, VSNL, MTNL, Airtel, Vodafone,

    Nokia, Indian Railways, BHEL, L&T, DMRC, NBCC, IOCL, ONGC, GAIL, OBC,

    Apollo Hospital, RML Hospital, Maruti Suzuki amongst others.

    Its products have been supplied and installed during Commonwealth Games

    2010 in New Delhi, India and at prestigious places such as The Rashtrapati

    Bhawan and Parliament House. Products are also being exported to over 30

    countries in Africa, South East Asia, Middle East and South America besides UK,

    USA and Australia.

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    Top ten players and competitors:

    The shift towards renewable energy and the demand for energy efficiency has

    pushed the market towards more efficient products such as light emitting diodes

    (LEDs). LED technology has been globally recognised as extremely efficient and

    eco friendly in comparison to the incandescent lamps (ICLs) and fluorescent lamps(FTLs/CFLs). With the entry of LEDs, the Indian lighting market has become more


    LED lamps and luminaires exhibit the strongest growth trends among all lighting

    technologies. The Indian lighting market is expected to grow at a CAGR of 45.5

    per cent till 2015, and by 2021 LED technology will penetrate 57 per cent of the

    lighting market in India. Recognising the benefits of this technology, the Bureau of

    Energy Efficiency (BEE) is working with lighting associations to define standards.

    Disclaimer: While the Electronics Bazaar editorial team has taken the utmost care

    to contact all possible sources to make the list of the Top LED Players

    comprehensive, we may have inadvertently left out a few companies from this list.


    Insta power product range include Aviation Obstruction Lights ( Low Intensity &

    Medium Intensity), Street Light, Home Light, Traffic Light, RGB Wall Washers,

    Fountain Light, Underwater/Walk over Lights, T5 Tube lights. The product basket

    keeps on adding quite frequently and their focus is to design products.

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    Executive Summary

    In last few years, the growth and development story of India has seen different

    stages. From the time of independence to 1991, the time of liberalization in India

    and then to the twenty first century, the markets have shown tremendous changes.

    Today consumers have got the power and the income to spend on products.

    Different firms entered in the market and lost but many succeeded and make their

    mark. All the markets start with nascent stage and later grow to its maturity.

    India and China are the two most popular countries in the world. India and China

    together contain about 37.5% of world population. So, India and China are huge

    markets. As these two countries play a massive role in world economy,

    theireconomy has a significant impact on world economy. But they differ largely

    in their trading pattern. China economic has grown by increasing investment in the

    manufacturing industry and increasing foreign trade, and for Indian economic

    growth mainly service sector is responsible. China is the one of the largest trading

    partner of India. In past few years trade between India and China has increased

    rapidly. so I have research on comparison between India and china economy.

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    CHAPTER- 2


    BRICS 11








    CHAPTER -6






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    India and China are the two most popular countries in the world. India and China

    together contain about 37.5% of world population. So, India and China are huge

    markets. As these two countries play a massive role in world economy, their

    economy has a significant impact on world economy. But they differ largely in their

    trading pattern. China economic has grown by increasing investment in the

    manufacturing industry and increasing foreign trade, and for Indian economic

    growth mainly service sector is responsible. China is the one of the largest trading

    partner of India. In past few years trade between India and China has increased

    rapidly. The economy of China is third largest in the world and still growing very

    rapidly. India is also developing with a fast rate. So, the trade between them leads

    to mutual cooperation and helps each other to develop. In this paper, I aim to find

    out the Chinas and Indias characters of few industries and changes in their trade

    during a certain period. I will mainly focus on bilateral intra industry trade of chosen

    commodities between India and China. By researching the data from various

    sources.I have calculated RCA of India over China and RCA of China over India.

    And after this analysis we will conclude that what changes can be made in Indias

    and Chinas trading patterns.

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    This paper attempts to explain the trade patterns between India and China.

    The questions which this paper attempts to answer are following

    What are the major exports and imports between both countries? Is

    there any

    change in exports and imports over last few years?

    Is there any attempt to reduce the barriers to trade by both countries?

    Objectives :

    Comparison of import and exports.

    Comparison of gold reserves between India and china.

    Foreign trade policy between India and china

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    Data for Population :

    Population of India and China - Although, India and China are the most

    talked about countries, when it comes to problems arising from the increasing

    population, many believe it is actually a blessing in disguise. With more than 50%

    population below the age of 25 and about 65% below 35, the average age of an

    Indian after 10 years is likely to be 29 years, whereas the average age of a

    Chinese and Japanese, will be 37 and 48 respectively. In addition, India's

    dependency ratio by 2030 is expected to be just over 0.4. According to estimated

    figures, the Population of India will be largest in the World in year 2030. On the

    other hand, Population of China will witness a decline in their growth after 2030. So

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    Population explosion will somehow benefit in India considering in mind its growing

    economy. But it will bring lots of serious issues related to health problems in India.

    Population of India in 2013 1,220,200,000 (1.22 billion)

    Population of China in 2013 1,360,000,600 (1.36 billion)

    Population of India in 2008 1,147,995,904 (1.14 billion)

    Population of China in 2008 1,330,044,605 (1.3 billion)

    In 1950

    India's Population was 350 million

    Population of China 563 million

    In 2040

    Population of India will be 1.52 billion

    Population of China will be 1.45 billion

    Proportion to World's Population

    India represents almost 17.31% of the world's Population

    China represents a full 20% of the world's population

    Facts and Comparison of Population between India and China stands in

    favour of India:

    According to latest figures, India is all set to exceed China in total

    population by the year 2030.

    In the next 25 years, India's Population will rise by almost 350 million.

    In year 2013, China's population was higher than India by over 200 million.

    In year 2050 India's Population is expected to surpass China by over 200 million.

    By 2030, India's working population will be youngest in the world as

    compared to China, USA and other countries.

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    In economics, Bric is Brazil,Russia,IndiaandChina,which are all deemed

    to be at a similar stage of newly advanced economic development countries. It is

    typically rendered as "the BRIC countries" or "the BRIC economies" or alternatively

    as the "Big Four". A related acronym isBRICSwhich includesSouth Africa.

    Projections on the future power of the BRIC economies vary widely. Some

    sources suggest that they might overtake the G7 economies by 2027. More

    modestly ,although the four BRIC countries are developing rapidly, it was only by

    2050 that their combined economies could eclipse the combined economies of the

    current richest countries of the world.

    In 2010, however, while the four BRIC countries accounted for over a

    quarter of the world's land area and more than 40% of theworld's population,they

    accounted for only one quarter of the world gross national income.

    According to a paper published in 2005,MexicoandSouth Koreawere the

    only other countries comparable to the BRICs, but their economies were excluded

    initially because they were considered already more developed, as they were

    already members of the OECD.

    Several of the more developed of theN-11countries, in

    particularTurkey,Mexico,IndonesiaandSouth Korea, were seen as the most

    likely contenders to the BRICs. Some other developing countries that have not yet

    reached the N-11 economic level, such asSouth Africa,aspired to BRIC status. So

    India and china are considered to be main countries in Bric.


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    Indian Rupee (INR) v/s Chinese Yuan (CNY), todays exchange


    This page is the Indian Rupee, code INR, versus Chinese Yuan, code

    CNY exchange rate page. Information provided includes the current

    exchange rate and todays lowest or minimum and highest or maximum


    It is optimised to Indian Rupee Chinese Yuan, Indian Rupee versus

    Chinese Yuan.

    Latest exchange rates, based on 1000 units of currency

    1000 Indian Rupee is worth 96.00 Chinese Yuan 28 January 2014 EDT1000 Chinese Yuan is worth 10415 Indian Rupee 28 January 2014 EDT

    Average bid 0.0971

    Average ask 0.0971

    Latest price 0.0971Maximum price 0.0976


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    The Gross Domestic Product (GDP) in China expanded 1.80 percent in the fourth

    quarter of 2013 over the previous quarter. GDP Growth Rate in China is reported by the

    National Bureau of Statistics of China. GDP Growth Rate in China averaged 1.99

    Percent from 2011 until 2013, reaching an all time high of 2.60 Percent in the second

    quarter of 2012 and a record low of 1.40 Percent in the first quarter of 2013. In China,

    the growth rate in GDP measures the change in the seasonally adjusted value of the

    goods and services produced by the Chinese economy during the quarter. China's

    economy is the second largest in the world after that of the United States. During thepast 30 years China's economy has changed from a centrally planned system that was

    largely closed to international trade to a more market-oriented that has a rapidly growing

    private sector. A major component supporting China's rapid economic growth has been

    exports growth. This data contains GDP ACTUALY AND IT IS FORECASTED FOR

    FUTURE. (2015).




    1.80 2.20 2.60 1.40 1.49 | 2014/02 2012 - 2013 PERCENT


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    China is India's largest trade partner also the most talked about 'rival'. The India-

    China trade stands at about $ 70 Billion, expected to increase to 100 Billion USD .

    So what's a trade deficit?

    Its just trade imbalance between two sides. One side exports more to the other,

    than it imports. Currently, India exports goods and services to China, 40 Billion

    USD less than what it imports from it.

    India's trade deficit with China was just $ 1 Billion in 2002, it has now boomed to


    First of all, we have to understand that in today's world, economy is not purely

    economy. Economy plays a very important role in Geo-Strategic planning in this

    scenario of the world where nations don't indulge into wars, neither into any other

    kind of violence, they just try making a nation kneel down by damaging it

    economically. What US is doing with Iran, they just put economic sanctions

    (barriers), and encourage others also to do so. By doing this, they try damaging

    Iran economically. So that shows how much economy is important today.

    Now lets take two scenarios one by one:

    1st Scenario: LETS SEE economically:

    Economy should be taken as 'extensively just economy' and other things should

    be kept out of loop. The beauty of international trade lies in the fact, you export

    what you are specialize in producing. China is such a big producer of goods as well

    as services because of affordable costs of labour and the manufacturing

    and business environment Chinese government has worked hard to create.

    There are two things in trading (Export and Import.)Export what you are surplus at,

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    and import what you are deficit at. If there is a demand for goods and services in

    India, which India itself doesn't produce adequately, it would obviously look to other

    nations who are surplus at those goods and services. A long list of nations would

    be formed, and the cheapest supplier will get elected, and find the cheap area for


    Trade isn't an equation that you start simplifying for each and every nation

    separately. We should think sensibly, if India gets what it needs from China, at

    cheaper price than others, then why isn't it good? Lets place it in the case of

    Pakistan. Pakistan runs a trade deficit with India, and if it liberalizes its market with

    India (as it is saying so), the trade deficit with India of Pakistan would considerably

    increase. India should export more to nations likeBangladeshor Pakistan or Sri

    Lanka who are not much competitive. Also, it shouldn't shy of getting its services

    and goods from competitive export markets like China.

    China provides excessive subsidies, whereas the Indian businessmen are quick to

    demand anti-dumping duties, and Indian government obliges. India has imposed

    anti-dumping duties more than any other nation. In the telecom sector, India has

    imposed additional curbs on Chinese telecom goods citing security issues. But the

    trade deficit continues to grow.. only proving that it isn't duties, its actually the

    productivity difference between both the nations, obviously manufacturing.

    Any economist would say that Exports are usually a secondary thing, basically a

    balancing act to imports. First and foremost, the local demands have to be

    addressed, and for that if there is any need to import, that should be done.

    China has put many obstructions on imports, like the medicine sector on which

    India has a command, that's a serious issue and that should be negotiated by

    India. But, managing trade deficit isn't a right approach in international trading.

    India should focus on making its own manufacturing industry bigger and better,

    also it should create an environment for other countries to import from. The right

    approach is to focus on productivity gap, not on trade gap.

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    2nd scenario: Lets think diplomatically:

    The India China trade deficit becomes a problem if we take thebilateral relations,1962 War, border dispute, and other things in mind. Keeping India to a trade deficit

    significantly provides China with a psychological advantage, It also forms an image

    of India as being inferior to it.

    The USA is indebted to China the most with about $ 1.1 Trillion. USA has lost a

    psychological advantage to China because of its own declining economy, and

    China's elevating economy. That could happen to India too in future if trade deficit


    Trade deficits also mean that you have a hold on foreign market, and if that hold of

    China grows from goods to banking and other sectors, that could be dangerous. If

    Indian government opens up other sectors for investment (FDI and others), and if

    Chinese government through its businessmen starts holding Indian corporate and

    banking sectors at hand, that would be a ceiling POINT.

    However, the trade deficit isn't that large (though 1/3rd of India's total trade deficit)

    to create a big impact today. I also believe that Indian government won't be too

    charitable with providing free access to Chinese. But nevertheless, risks can't be

    taken in 21st century civilization, where wars won't be fought with guns and tanks

    but with diplomacy and economy.



    China has emerged as Indias largest trading partner as it replaced the US in

    March 2008. When India initiated its comprehensive reforms in 1991, the level of

    bilateral trade between the two countries was insignificant as the trade basket was

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    restricted to a limited number of products. However within a short period, China

    has become Indias single most important trading partner even though India itself

    has reached at an unsustainable bilateral trade deficit of US$ 26.3 billion in 2010

    (IMF, 2012a). Policy makers will have to find ways to manage this huge deficit

    given that India can neither afford to limit its economic engagement with China nor

    continue with such a huge bilateral trade asymmetry for a long period of time.

    China has been on a high growth trajectory for more than three decades, while

    even maintaining a sustainable rate of growth at more than 9 per cent per annum

    during the period 2002-12. The rate of domestic expansion has been robust since

    its accession to the WTO in 2001. As is evident from statistics, the main drivers of

    Chinas economic growth have been its export and a subsequent expansion of the

    domestic sector, accompanied by its import surge. During the above reference

    period, Chinas export share in the world economy increased from 3.4 per cent to

    10.4 per cent, and the corresponding shares for its imports were 4.4 per cent to 9.1

    per cent, respectively. The global economy started recovering from recession in

    2010, but with the deepening of the financial situation in Europe once again

    entered the danger zone until third quarter of 2013. However, the US economy has

    shown positive forward movements in GDP growth and a persistent development

    in the employment situation in 2013.The global situation continued to remain fragile

    in 2012, and its adverse impact was felt in most of the emerging countries that

    included China and India. Though it suffered from global downturn, China has

    strategy to take advantage from the expected recovery of the global economy.

    As China emerges as the largest trading partner of India, there are many bilateral

    issues that require close scrutiny. Indias bilateral trade gap is increasing along with

    the countrys overall trade gap with the rest of the world. It is important to exami ne

    to what extent is this bilateral trade imbalance contributing to the overall tradeimbalance of India. How to sustain the present level of bilateral trade while at the

    same time narrowing the existing bilateral trade gap is an important challenge for


    A comparative analysis of the tariff policies of both countries is important

    because of their increased engagement with the world economy. Moreover, their

    participation in various Regional Trading Agreements (RTAs) in Asia and in other

    parts of the world, is expanding rapidly over years. Reform processes in tariff

    policies in both countries are again, linked to their external sector performances.

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    Relative external sector performance in both countries requires further

    investigation in the light of ongoing trade policy reforms.

    The Global Value Chain (GVC) has emerged as an important vehicle of trade

    in the global economy. While the 1950s and 1960s, usage of this trade process

    was mostly in the domain of developed countries, presently, it is an important

    source of trade engagement between North-South and South-South. Global value

    chain remains relatively an unexplored policy option with India. However, China

    and India are becoming important players in such activities for both developed and

    developing countries particularly in their engagement with the US and the EU.


    As India and China are the two fastest growing countries of the world, thepossibility of an economic approach among them to seize the synergies of their

    development is an interesting issue for discussion. Both the countries have

    witnessed transitions in their economic policies during the last two-three decades,

    and the irreversible nature of economic liberalisation has enabled each nation to

    integrate with the world economy. While analysing the existing patterns of their

    trade and the sector complementarities for further economic engagement, the

    comparative macroeconomic performance of both economies may be examined in

    recent years. The robustness of these economies may be seen from their

    macroeconomic performances.

    Sustaining High Growth

    China has increasingly attracted the attention of the global economic community

    during the last three decades due to its excellent track record in maintaining a high

    growth rate unparallel in the annals of the world economy. Since 1980, China has

    been maintaining an average GDP growth of about 9 per cent per annum and has

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    taken major strides in elevating large sections of its population above the poverty

    global buoyancy which spanned the year 2005 to 2013, its GDP growth rate

    accelerated to more than 10 per cent per year, while its highest growth rate in

    recent time was recorded in 2074 .The reoccurrence of the Global Financial Crisis

    in 2008 tapered global economic activities substantially. However, China continued

    to maintain higher growth despite the persistence of a global economic downturn.

    In the Post-Asian Financial Crisis period, the external sector has emerged as the

    key source of Chinas growth, and its exports and imports grew at the rate of 28.1

    per cent and 25.4 per cent, respectively during 2003-08 and declined significantly

    during 2009-10.Foreign direct investment added up to $378 billion cumulatively

    with about $108 billion in 2008.

    Trade and Trade Policies in Key Sectors of Interest to India

    The sectoral composition of Chinas exports has some interesting characteristics.

    While China is usually seen as specialising in exports of labour-intensive products,

    its export basket is rapidly moving towards high technology products. The cutting

    edge of Chinas exports is now provided by relatively high technology products

    involving machinery and transportation equipment, particularly office machines and

    telecommunication equipment and parts. Exports of these products have increased

    more than five-fold in the last seven years and they now account for nearly half of

    the manufactured products. One important gap in Chinas export drive is evident in

    the service sector. Since market, the national income statistics include services,

    but the service sector is still relatively underdeveloped. With respect to external

    trade too, China is lagging in exports in this sector. In 2013, China is expected to

    have a significant trade deficit in the service sector.India on the other hand has a

    large service sector and its exports of services are increasing rapidly.


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    The tariff liberalisation policy in agriculture has been striking in China since its

    accession to WTO. Applied tariffs on agricultural products fell from 23.2 per cent in

    2001 to 14.5 per cent in 2009. There has been a considerable reduction in the

    average rate of applied tariff in sectors like dairy products, grain and oilseeds.

    Tariffs on sugar and tobacco remained high for sometime.


    China has been the worlds fourth largest automobile manufacturer since

    2003, after the United States, Japan and Germany. In 2004, China became the

    third largest market in the world, after the United States and Japan. According to

    forecast made by Goldman Sachs reported in The Economist, 16 September 2006,

    the car ownership in China may exceed that of the US by 2025 and may become

    twice as high (over 400 million vehicles) as the level of US ownership by 2040.

    China has become the worlds second largest car market in terms of sal es asmillions of Chinese are buying cars for the first time. India cannot afford to ignore

    this market. India should start preparing for penetrating this market. Just as Japan

    and Korea succeeded in competing with the giant car manufacturers of the US,

    India can succeed in competing with the manufacturers in China, which are

    generally joint ventures between state-owned enterprises and foreign car majors. A

    few home grown companies like Cherry have come up rapidly as producers of

    cheap cars. However, quality and reliability concerns have affected their plans to

    move into the developed country markets until 2008. Foreign investment plays an

    important role in Chinas automotives sector and FIEs accounted for around three-

    fourth of Chinas passenger car production.

    Chinas electronic and communications equipment industryis the third largest

    in the world in terms of output, after the United States and Japan. Electronic and

    communications equipment also account for the largest share of Chinas exports.

    The export revenue of the sector constitutes nearly one-third of Chinas total export

    value. In the total export proceeds, the share of domestic firms has been

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    insignificant. The central government has adopted several measures to assist the

    development of the electronic and communications equipment industry, in

    particular to improve the technological capabilities of domestic enterprises. Under

    this policy, the government allocates funds to software and IC industries for the

    establishment of software design centres in, inter alia,universities and research

    institutes. Preferential policies include VAT rebates, tariff exemptions for imported

    equipment for own use, export loans provided by EXIM Bank and export credit

    insurance provided by SINOCUE at favourable terms, government procurement

    preferences, and a special fund to promote domestic enterprises R&D ability in the

    semi-conductor industry.


    The services sector in China has been underdeveloped during the planning

    era and now presents a significant potential in view of the rapid growth of the

    economy. In order to tap that potential, the Chinese government has identified the

    development of services sector as a priority sector in the 11th and 12th Five-year

    Plans for National Economic and Social Development. With the spectacularperformance of exports and imports over the past few years, the contribution of

    services to GDP in terms of value added has surged from 39.7 per cent in 2005 to

    40.1 per cent in 2008. Some of the most important export sectors in services are

    transport and other business services during the last decade. Potentially other

    important export sectors are communication, construction, computer and

    information, insurance, finance and royalties and license fees, which are expanding

    fast in recent years.

    China decided to significantly liberalise foreign investment in its service sectors. In

    its Accession Agreement, China committed itself to the substantial opening of a

    broad range of services particularly, in sectors of possible importance to India such

    as banking, insurance, distribution, telecommunications and professionals

    services. These commitments are in principle far reaching particularly, when

    compared to services commitments of many other WTO members. These areasalso happen to be of interest to the US and there is much potential for India to work

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    jointly with the US companies in expanding Indias presence in China in these


    While China continued to keep pace nominally with the openings required by

    its WTO accession agreement, it frequently maintained or erected terms of entrythat were so high or cumbersome as to prevent or discourage many foreign

    suppliers from gaining access. For example, despite some progress, excessive

    capital requirements continue to restrict market entry for foreign suppliers in many

    sectors, such as insurance, banking, securities, non-bank motor vehicle financing,

    asset management, direct selling.



    Financial sector reforms began in China in 1979, when the monopoly of the

    Peoples Bank of China (PBC) was removed and its commercial functions were

    separated into four state-owned banks. Joint-stock banks were introduced later to

    diversify the ownership structure in the banking sector. A notable feature of the

    financial sector is the high degree of government ownership.

    Structure of Indias Import from China

    In recent years, Indias imports from China have been diversified, and certainsectors continue to dominate in the bilateral trade. Other imports are spread thinly

    in almost all the manufacturing sectors. Indias imports from China comprise both

    agricultural and manufacturing products. India imports small quantities of

    agricultural products and they cover, nearly 1 per cent of its total bilateral imports.

    These products are mainly from the fruits and vegetable category

    Indias bilateral imports are mostly concentrated in the manufacturing sector.

    Four dominant sectors comprising of chemicals, machinery, base metals and textile& clothing contributed around 85 per cent to bilateral imports in 2012. Among these

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    sectors, the largest and the most dynamic sector has been that of machinery

    import. Its share in the total bilateral imports increased from 76.5 per cent in 2005

    to 81.0 per cent in 2012, growing at a CAGR of 31.8 per cent per annum between

    2005 and 2012. The chemical sector has registered a CAGR of 35.9 per cent

    during 2008-12, but its share declined during the period due to significant growth in

    overall bilateral imports. Some of the sectors such as minerals, plastic products,

    auto sector and cinematography also witnessed substantial penetration in the

    domestic market. According to the UN statistics32, Indias bilateral imports were

    US$ 24.2 billion in 2009 and increased to US$ 28.9 billion in 2012, despite being

    affected adversely by the recent global meltdown. In terms of composition of

    Indias bilateral imports from China, sectoral shares are declining for minerals, pulp

    products, textiles & clothing, and base metals. Indias bilateral pattern of imports

    clearly indicates that demand for technology-intensive products is becoming strong

    in the domestic market whereas demand for labour intensive and resource-based

    products is gradually becoming weak in recent years.

    Chinas global pattern of export is similar to its bilateral exports to India.

    Agricultural products constitute a small proportion of Chinas total export, but are

    expanding over the years. Contrary to its earlier practices, mineral exports are

    declining in the countrys trade basket and form 2 per cent of the total exports in

    2008. Manufacturing exports dominate Chinese global export. Some of the major

    sectoral drivers of exports are textiles and clothing, machinery, auto sector, and

    chemicals. Other important export sectors are plastics, footwear, cinematography,

    etc. and many of these have grown fast in the pre-crisis period.

    Indias Bilateral Trade Imbalance with China: Sustainability Issue

    There is growing concern in India relating to sustainability of mounting bilateral

    trade along with surging trade imbalance between them in the medium term. Some

    argue that India is an emerging country with a large demand for imports to

    enhance its exports and also to meet growing domestic demand for consumption

    including modernisation of its industrial sector. While others argue that excess of

    consumption over production may lead to an unsustainable current account deficit.

    Both arguments assume that import from China is competitive compared to many

    other suppliers in the domestic market. However, cost efficiency of Indian imports

    from China is an empirical question which needs to be examined.

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    In the 1950s, several studies took this argument further to emphasise that trade

    based on least cost principle became the basis for formation of Regional Trading

    Agreements (RTAs). The basis of production fragmentation has been to bring down

    the cost of production to maintain global competitiveness. Present global trade

    flows indicate that China is a major global player in production fragmentation in

    diversified sectors, and Indias imports may be surging from China in these product

    segments because of its competitive imports. Such trade activities would promote

    trade in intermediate products at the bilateral level.

    India is a major importer of primary and technology intensive products for

    sustaining its ambitious programme of industrialisation and the countrys growing

    needs for energy consumption. However, the competitiveness of Chinese products

    in the Indian market is an empirical question, which needs empirical examination.

    Constraints to Indias Exports to China

    In general, tariffs in China are lower than those in India particularly, for Indias

    major export items such as ores, pharmaceutical products, plastics, manmade

    staple fibers, and iron and steel. The non-tariff barriers and informal restrictions are

    of greater concern. Such restrictions in China on imports of goods and services

    apply to imports from India as well. Indian industry and business organisationshave identified similar constraints in promoting their exports to China, for example:

    customs procedures, standards, certification and regulatory practices, and

    quantitative restrictions.

    It was noted while examining the customs procedures that even after the

    issuance of valuation regulations in accordance with WTO Customs Valuation

    Agreement, many customs officials continue to use the minimum or reference price

    rather than the actual transaction price for valuation of goods. Re-exporters are

    allowed to import raw material only through a specified port. If they operate through

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    other ports, they have to follow extremely difficult procedures to avail of duty free

    clearance of cargo. This problem is especially serious for Indian traders because of

    the limited transport links between India and China, which do not allow free choice

    of ports for landing.

    Rules and regulations pertaining to standards and certification as applied to

    imports are different from those applied to domestic goods and these are

    frequently changed, the details of which are not easily available in a published form

    in the English language.. In cases of trade disputes, the international system of

    arbitration for trade disputes is not recognised.Though such trade barriers are

    tough in China, India can yet explore the opportunity of a large trade potential in

    China in diversified sectors. Considering the trade opportunities in China and

    Indias competitiveness in several lines of exports, the present trend of trade

    imbalances may be settled without limiting the size of bilateral trade.

    Indias Export Potential inChina

    India has been maintaining a high export growth to China since 2004, but this has

    been adversely affected by the recent episode of global recession. Growth of

    imports in most of the important export markets of India became either negligible or

    negative since September 2008. This trend is slowly turning around in recent

    months. China is one among the important market destinations in which Indias

    export potential has been inadequately realised on account of the recent global

    turmoil. Indias large trade potential is yet to be tapped in diversified sectors of the

    Chinese market ranging from primary .

    China recently became Indias largest trading partner, and its exports have

    increased so sharply that it is inflicting an unsustainable trade deficit on India which

    has achieved a moderate bilateral export growth only so far. For reversing the

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    problem of trade imbalances without interrupting the present flow of bilateral trade,

    sharp focus on the growth of Indias exports may be emphasised for the balanced

    growth of the domestic external sector. For addressing trade imbalances, India

    should substantially improve its presence in the Chinese export market. In this

    context, an attempt has been made to estimate Indias export potential in China at

    a disaggregated product level based on the export competitiveness of India.










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    Three weeks ago it became clear that in its fight to curb consumer thirst for gold

    products, India, whose population is the largest single source of gold consumer

    demand (at least for now, soon to be replaced with China) is losing said fight, after

    its finance minister made it very clear that "demand for gold must be moderated"

    leading to a hike in import taxes to 4%. Needless to say, there is no more certain

    way to increase demand for a given commodity than to hint that the government

    will make its procurement problematic. Sure enough India blamed its record current

    account deficit on precisely this: the soaring imports of gold as locals revert to a

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    currency far more appreciated and respected than paper, a topic further explained

    It is precisely the importing of gold that India is once again doing its best to curb,

    this time by boosting import duties on gold bars by a 150% from 2% to 5%, a day

    after it once again hiked gold import taxes, this time by 50% from 4% to 6%.

    Rising imports of gold have worried the government, which is battling a record high

    current account deficit. It is trying to curb gold imports to about $38 billion in the

    year to March 31, 2013, down from $58 billion a year earlier.

    Ironically, while the ongoing piecemeal attempts to deal with the "current account

    imbalances" driven by the people's desire to park their money in real money will

    fail, what the government's intervention willdo is force even more demand for gold

    in anticipation of even more government attempts to make procuring gold

    increasingly more difficult. But don't tell the BIS - for them this headline is nothing

    more than what it implies superficially, and thus, a good reason to sell gold.

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    No. Economic or Socialfactor

    Unit of

    measurementChina India

    1. Total Area (out of

    which water)

    millions of sq


    9.60 (2.8%) 3.29 (9.5%)

    2. Arable Land millions of sq


    1.48 1.79

    3. Irrigated Land millions of sq


    0.53 0.61

    4. Railways - length in km '000 71.90 63.23

    5. Roadways - paved -


    in km '000 1,447 2,411

    6. Waterways - length in km '000 123 14.5

    7. Natural Gas - Proved


    in billion cu m 2,530 854

    8. Oil - Proved Reserves billion bbl 18.60 5.70

    9. Airports -


    numbers 489/389/89 334/239/995

    10. Coastline in km 14,500 7,000

    11. Steel Production million


    280 45

    12. Food grain production million


    418 210

    13. Cement Production million


    650 150

    14. Crude Oil production million


    180 40

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    15. Coal Production million


    1,300 300

    16. Electricity generated Billions of


    2,190 557

    17. Transmission &

    distribution losses

    as % of total


    6.8 23.4

    18. Electricity tariff US$ / 100 KW 4 to 5 8 to 10

    19. Cost of commercial


    as % interest/


    6 - 7 816

    20. Telephone lines


    millions 311 67

    21. TV sets in households millions 500 85

    22. Mobile/cellular phones millions 400 100

    23. Internet users millions 111 51

    24. Foreign trade (China+

    Hong Kong)



    1038+923=1961 260

    25. External debt (China+

    Hong Kong)

    US$ billions 242+416= 658 120

    26. Exports (China+ Hong




    752+286= 1038 120

    27. Imports (China + Hong




    632+291= 923 138

    28. Tourist Arrivals millions/year 87 4

    29. TV broadcast stations numbers 3240 562

    30. Radio broadcast




    369/259/49 153/91/68

    31. FDI inflow (China +

    Hong Kong)



    106 8

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    32. Forex Reserves

    (China+ Hong Kong)

    US$ billions 1017+122=



    33. GDP (China+ Hong


    US$ billions 2102+179=



    34. GDP Growth (2006) in % rate over

    last year

    9.3 7.9

    35. Labour Composition Agriculture

    %/Industry %/

    Services %

    49/22/29 60/17/23

    36. Population millions 1,314 1,095

    37. Population increase

    per year

    millions 7.2 15.3

    38. Birth rate Numbers per


    13 22

    39. Per Capita income US$ per


    1,498 658

    40. Life expectancy Years 74 64

    41. Investment % of GDP 44 25

    42. Poverty line - numbers %/Numbers in


    10/131 25/273

    43. Inflation Rate % 1.9 4.6

    44. Median age Number of


    33 25

    45. Population Growth


    % of


    0.59 1.38

    46. Infant mortality rate Death Rate

    per 1,000

    23 55

    47. GDP (PPP) US$ billions 8,182 3,699

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    48. GDP (PPP) per


    US$ per


    6,300 3,400

    49. Fertility Rate children


    1.73 2.73

    50. Literacy Rate -

    Defined as age 15 and


    can read &

    write - % of


    91 60

    51. Death Rate Rate per

    1,000 pop

    6.97 8.18

    52. Public Debt % of GDP 29 82

    53. Unemployment rate % of


    20 30

    54. Labour force in millions 797 496

    55. People living with


    '000 (2003) 840 5110

    56. Government budget


    US$ billions 392/424 111/126

    1 billion = 1000 million,

    1 million = 10 lacs,1crore = 100lacs = 10million

    Foreign trade policy between INDIA AND CHINA

    The Govt. of India, Ministry of Commerce and Industry announce Export Import

    Policy every five years. The current policy covers the period 2002-2007. TheExport Import Policy (Foreign Trade Policy) is updated every year on the 31st of

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    March and the modifications, improvements and new schemes are effective

    1sTApril. .

    Context of new Foreign Trade Policy

    For India to become a major player in world trade, an all encompassing,

    comprehensive view needs to be taken for the overall development of the country.

    While increase in exports is of vital importance, we have also to facilitate those

    imports which are required to stimulate our economy. Coherence and consistency

    among trade and other economic policies is important for maximizing the

    contribution of such policies to development. Thus, while incorporating the existing

    practice of enunciating an annual Foreign Trade Policy, it is necessary to go much

    beyond and take an integrated approach to the developmental requirements of


    The Foreign Trade Policy is built around two major objectives. These are:

    To double our percentage share of global merchandise trade within the next

    five years;

    To act as an effective instrument of economic growth by giving a thrust to

    employment generation.


    For achieving these objectives, the following strategies need to be adopted:

    Unshackling of controls and creating an atmosphere of trust and

    transparency to unleash the innate entrepreneurship of our businessmen,

    industrialists and traders.

    Simplifying procedures and bringing down transaction costs.

    Neutralizing incidence of all levies and duties on inputs used in export

    products, based on the fundamental principle that duties and levies should not

    be exported.

    Facilitating development of India as a global hub for manufacturing, tradingand services.

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    Identifying and nurturing special focus areas which would generate

    additional employment opportunities, particularly in semi-urban and rural

    areas, and developing a series of 'Initiatives' for each of these.

    Facilitating technological and infrastructure up gradation of all the sectors of

    the Indian economy, especially through import of capital goods and

    equipment, thereby increasing value addition and productivity, while attaining

    internationally accepted standards of quality.

    Activating our Embassies as key players in our export strategy and linking

    our Commercial Wings abroad through an electronic platform for real time

    trade intelligence and enquiry dissemination.

    The new Exim-Policy is essentially a roadmap for the development of India's

    foreign trade.

    It contains the basic principles and points the direction in which we propose to go.

    By virtue of its very dynamics, a trade policy cannot be fully comprehensive in all

    its details. It would naturally require modification from time to time. We propose to

    do this through continuous updating, based on the inevitable changing dynamics of

    international trade. It is in partnership with business and industry that we propose

    to erect milestones on this roadmap. With a view to doubling our percentage share

    of global trade within 5 years and expanding employment opportunities, especially

    in semi urban and rural areas, certain special focus initiatives have been

    identified for the agriculture, handlooms, handicraft, gems & jewellery and


    The thrust sectors indicated below shall be extended the following facilities:


    A new scheme called the Vishesh Krishi Upaj Yojana(Special Agricultural

    Produce Scheme) for promoting the export of fruits, vegetables, flowers, minor

    forest produce, and their value added products has been introduced.

    Fundsshall be earmarked under ASIDE for development of Agri Export Zones


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    Units in AEZ shall be exempt from Bank Guaranteeunder the EPCG Scheme.

    Import of capital goods shall be permitted duty free under the EPCG Scheme.

    Units in AEZ shall be exempt from Bank Guarantee under the EPCG Scheme.



    Duty free import entitlement of trimmings and embellishments shall be 5% of the

    FOB value of exports during the previous financial year. The entitlement is broad

    banded, and shall extend also to merchant exporters tied up with supporting


    The Handicraft Export Promotion Council shall be authorized to import trimmings,

    embellishments and consumables on behalf of those exporters for whom directly

    importing may not be viable Specific funds would be earmarked under MAI & MDA


    CVD is exempted on duty free import of trimmings, embellishments and


    Gems and Jewellery

    Import of gold of 18 carat and above shall be allowedunder the replenishment


    Duty free import entitlement of consumables for metals other than Gold, Platinum

    shall be 2% of FOB value of exports during the previous financial year.

    Duty free import entitlement of commercial samples shall be Rs 100,000.

    Duty free re-import entitlement for rejected jewellery shall be 2% of the FOB value

    of Exports. Cutting and polishing of gems and jewellery, shall be treated as

    manufacturing for the purposes of exemption under Section 10A of the Income


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    Leather and Footwear

    The duty free entitlement for the import of trimmings, embellishments and footwear

    components for footwear (leather as well as synthetic), gloves, travel bags and

    handbags shall be 3% of FOB value of exports of the previous financial year. Theentitlement shall also cover packing material, such as printed and non printed

    shoeboxes, small cartons made of wood, tin or plastic materials for packing


    Export Promotion Schemes:

    Target plus scheme to accelerate growth of exports.

    Vishesh krishi upaj yojna for agro-exports.

    Served from India scheme.

    Additional flexibility under EPCG.

    Import of fuel under DFRC entitlement allowed to be transferred to

    marketing agencies authorized by Min of Petroleum and Natural Gas.

    The DEFB scheme will be continued.

    EOUs shall be exempted from Service Tax in proportion to their exported

    goods and services.A scheme to establish Free Trade and Warehousing Zone is introduced to

    create trade-related infrastructure to facilitate import and export with freedom

    to carry out trade transactions in free currency.

    A Note on Special Economic Zones (SEZ)

    SEZ are growth engines that can boost manufacturing, augment exports andgenerate employment. The private sector has been actively associated with the

    development of SEZs. The SEZs require special fiscal and regulatory regime in

    order to impart a hassle free operational regime encompassing the state of the art

    infrastructure and support services. The proposed legislation on SEZs to be

    enacted in the near future would cover the concepts of the developer and co-

    developer , incorporate the provision of virtual SEZs, have fiscal concessions

    under the Income Tax and Customs Act, provide for Offshore Banking Units

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    Research Methodology

    Research methodology is the arrangement of condition for collection and analysis

    of data in a manner that aims to combine the relevance to the research purpose

    with economy in procedure. Research is conceptual structure within which

    research is conducted.

    Research Design:

    Research design begins with the identification of management decision problem

    and the success of the research highly depends on the well description of

    management decision problem.

    A Research Design is a frame work or blue print for conducting the marketing

    research project .MY RESEARCH IS DESCRIPTIVE...

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    Descriptive: Descriptive study is an extension of exploratory study and it contains

    people surveyed, method of analysis, data collection and analysis of proBLEM of

    India and China.

    In this project, Descriptive Research Designhas been used.

    The major objective of descriptive research is to describe something, usually

    market characteristics or functions. Descriptive research is conducted for the


    To describe the characteristics of relevant groups, such as

    consumers, sales people, organizations, or market areas.

    To estimate the percentage of units in a specified populationexhibiting a certain behaviour.

    To determine the perception of product characteristics.

    To determine the degree to which marketing variables are associated.

    To make specific prediction.

    The Descriptive research can be classified in two methods:

    1) Survey Methods

    2) Observation methods

    In this project, Observat ion method IS USED .As th e research is d on e by

    anaysing the data from diferent second ary method s.Second ary Data:

    The data which has already been collected, complied and presented earlier by any

    agency may be used for purpose of investigation. The data collected through:

    Var ious publ ica t ions in form of annual reports , var ious p apers and journa ls

    pub l ished f rom t ime to t ime.


    1. Internet

    2. Newspaper

    3. Magzines

    4. journals

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    2. I have analysed that china will demand more gold than

    India in next5 year.


    COUNTRIES. It says that china is more focused on technology

    products than labour Intensive .

    4. From the facts and figures in above data I have analysed

    that china demand for gold increased by 5% in year 2010-11.

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    5. China demand was 1700 in 2011 from 1600 in 2010 but

    India demand was constant through out the year.

    6. The china demand in comparison to world demand was

    increasing from 1999 to 2011.But India demand in relation to

    world demand was fluctuating during this period.

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    Whether or not India overtakes china in the next two decade, it is clear that both

    countries will be economic power houses in the medium term. Undoubtedly, their

    growth will have significant impacts on the world economy.

    Their increasing competition for the worlds raw materials and increasing shares in

    the global markets for a range of goods and services is a threat to their prosperity

    and growth.

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    JOURNALS: Dimaranan Betina, Lanchovichina Elena, and Martinr Will, 2007,

    China, India, and the Future of the World Economy, Policy Research Working

    Paper 4043, The World Bank Development Research Group, August

    Wilson Dominic and Purushothaman Roopa, 2003, Dreaming with BRICs: The

    Path 2050, Goldman Sachs, Global Economics Paper no : 99, October.

    McDonald Scott, 2007, Asian growth and Trade Poles, World Development Vol.

    36, Oxford Brookes University, UK , June.






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