India-China FTA being contemplated

21 November 2006

Chinese President Hu Jintao has arrived and is pressing for a free trade agreement with India. But India wants to look beyond a free trade deal, reports CNBC-TV18.

While China is pressing for a free trade agreement, India is hesitant. It believes that China subsidises its exports, but the Commerce Minister thinks that an FTA is not ambitious enough.

Commerce minister Kamal Nath says, "An FTA with China is not on the cards, but we should look at it. China and India have great synergies, but let''s not call it an FTA. We should look at an economic cooperation agreement which is much more than that."

Unlike trade, investment relations are scratchy. India bars Chinese investments in sensitive areas like the North East and in sensitive sectors like ports and telecom. The security establishment is paranoid.

The cabinet last week approved an investment promotion and protection agreement with China that will be signed during President Hu''s visit. The government is looking at a way of addressing security concerns without raising Chinese hackles.

Says Nath, "The question is how transparently it is implemented. How does it meet its ends. Do we need a law for it or can it be done without a law. All these aspects are being looked into."