China and India will sign a $6.8 billion deal to establish two industrial parks as part of an effort to reduce the huge trade imbalance that India has built up in its $65 annual bilateral trade with China.
Chinese President Xi Jinping along with Indian Prime Minister Narendra Modi witnessed the signing of three memoranda of understanding (MoUs), within hours of his arrival in Ahmedabad.
Xi is in India for a three-day visit as the two Asian giants take steps to boost commercial ties.
Chinese embassy sources said in New Delhi that another $3.4 billion worth of agreements would be signed between Chinese and Indian firms at a separate business event during the three-day visit of Chinese President Xi Jinping.
Further deals worth tens of billions of dollars were expected to be announced on the three-day visit, dwarfing the $400 million invested by China in India over the past 14 years.
China, however, seems to be in no mood to sacrifice its manufacturing edge even as the Indian government under Prime Minister Narendra Modi is counting on Chinese technology to drive India's manufacturing growth.
China, which sees itself as the "world's factory" wants its manufacturing strengths complimented by India's position as the "world's back office", which visiting Chinese President Xi Jinping said will drive global economic growth.
The Chinese President made the comments ahead of his visit to India that started with his arrival in Ahmedabad today.
Earlier, President Xi and the first lady Peng Liyuan, who arrived in Ahmedabad, Gujarat, today, were received at the Hyatt Hotel in Ahmedabad by Prime Minister Narendra Modi.
After a one-to-one interaction, the PM and the Chinese President signed three memoranda of understanding (MoUs). These include an MoU establishing 'Sister Province' relations between Guangdong in China and Gujarat in India, which covers cooperation in economy and trade, environmental protection, public policy education, health, science and technology, tourism and culture.
The Chinese city of Guangzhou and Ahmedabad, the capital city of Gujarat, also signed an MoU for closer cooperation between the local authorities of the two cities, which will facilitate engagements in the fields of economy and trade, environment protection, public policy, education, health, science and technology, tourism and culture.
Knowledge sharing will be done through delegation visits, institutional meetings and sharing of experiences in areas of mutual interest.
The Industrial Extension Bureau (iNDEXTb), the nodal agency of the government of Gujarat for investment promotion, and China Development Bank signed another MoU, under which iNDEXTb will assist Chinese investors in obtaining required clearances and creating infrastructure facilities in the industrial parks.
Xi's visit coincides with a slowdown in China's economy, with Chinese companies looking abroad for growth opportunities.
Modi, on the other hand, is keen on Chinese investment to help reduce the huge imbalance in its $65 billion annual trade that is heavily tilted in China's favour.
He is also seeking more access for India's IT services and pharmaceuticals to Chinese markets.
The two leaders may also discuss various issues that mar their economic ties, including working together on civilian nuclear programmes and seeking a solution to the long-running border row and visa issues.
Days before the Chinese President landed in Ahmedabad friction emerged over Chinese incursion in Ladakh and India's signing of a pact with Vietnam for exploring oil and gas in parts of the South China Sea, which is claimed by Beijing.
Modi also seems to be a PM in hurry. In a little more than 100 days since he came to power, he has started "an intensive state of global engagement", reaching out to smaller neighbours and embracing Japan's Abe on his first major trip outside South Asia.
Modi is due to visit Washington and New York at the end of the month.
India has taken a tougher stance on Beijing's practice of issuing stapled, rather than printed, visas to Indian citizens from Arunachal Pradesh and Ladakh, which China claims as part of its territory.
Foreign minister Sushma Swaraj told her Chinese counterpart she expected China to accept a "one India policy."
"When they raised with us the issue of Tibet and Taiwan, we appreciated their sensitivities. So we also want that they should understand and appreciate our sensitivities regarding Arunachal," she told reporters earlier this month.