India and China, Asia’s two fast growing large economies of the decade have planned to liberalise trade ties as they exchange offers on tariff cuts in goods imports.
- Against India’s offer to remove 5% of tariff lines under the 16-country Regional Comprehensive Economic Partnership (RCEP), China has expressed its willingness to abolish equivalent amount of tariff lines for India.
- Removal of tariff lines would mean that the import taxes on the items would be reduced to zero over a specified period of time
- Cotton fibre and yarn, copper and some organic chemicals are the major items that India has exported to China while its imports include electronic items, mechanical appliances, organic chemicals, fertiliser and iron and steel
- India’s merchandise exports to China stood at a mere $11.9 billion in 2014-15, while China’s exports to India were to the tune of $60.4 billion.
- The potential customs revenue loss for the country as a percentage of its gross domestic product (GDP) will be much higher than China’s, also because of the fact that China’s GDP is more than four times of India’s
- RCEP comprises 10 Asean nations and six others with which these countries have already forged FTAs
President: Xi Jinping