India to Step-up Agri-Diplomacy with China | 19 Nov 2018

India is looking forward to increase agricultural exports to China as it proceeds to diversify its agricultural imports.

Reasons For India's "Agri-Diplomacy"

• Trade Deficit
  • India is looking for ways to bridge the huge trade deficit of more than $60 billion with China. China accounted for about 39% of India’s trade deficit in 2017-18.
  • India’s total trade with China reached over $89 billion in 2017-18, of which Chinese exports to India were around $76 billion.
• US-China Trade War 
  • Both the US and China are imposing tariffs on each other. Hence, China is now opening up to non-US imports in order to diversify its import basket.
  • Beijing recently imposed new tariffs on many American farm produce, including soybeans, corn, wheat, cotton, rice, sorghum, beef, pork, poultry, fish, dairy products, nuts and vegetables.
  • India is hoping to take advantage of the Sino-US trade war by exporting more soybean produce to China.

Steps taken to Cover Trade Deficit

• During Shanghai Cooperation Organisation (SCO) Summit in Qingdao in 2018. India and China signed an agreement to include the export of non-Basmati varieties of rice from India. China is a $1.5-$2 billion market for Indian rice
• India has also signed an agreement with China to increase the export of sugar from India.

Way Forward

• If India has to cover the huge trade deficit with China, it has to look beyond agri-diplomacy. There are many areas in which trade with China can be increased to cover trade deficit like that pharmaceuticals, information technology services and tourism, in which India has a significant global footprint, but a minuscule presence in China.
• At domestic front, India has to take significant efforts like modernization of agriculture to make it competitive at global level, the high price of India's farming products is a major obstacle.