By Saibal Dasgupta
BEIJING: India has finally begun to broaden its export basket to China after several years of constant efforts to overcome its reliance on natural resources like iron ore. Recent statistics also show that the two countries have managed to sell the same category of goods to each other in much larger numbers than in the past.
Dramatic growth has been witnessed in Indian exports of machinery, cotton, cotton yarn, fabric, food waste and animal feed in the first 10 months of this year as compared to the same period in 2005. The sale of cotton, yarn and fabric shot up 188% to $729 million while the growth in machinery was 172.9% to reach $391.70 in the same period. Two other items, electrical machinery, artificial flowers and feathers have also notched comfortable growth exceeding 40%.
The Indian government has been keen on reducing exports of natural resources and trying to push value-added products, which provide greater returns as well as help develop the domestic industry. The latest figures show that a good beginning has been made to achieve this long-sought objective. The only exception is the 107% growth in copper and copper goods, which was sold for $250 million in between January-October this year.
One of the questions that has bogged bilateral trade is whether there are sufficient goods available for exchange between two countries that are similar in terms of pricing and nature of goods they produce.
The latest statistics has answered this question by throwing up possibilities of exploiting huge amounts of niche areas. Both countries have made impressive growth in selling machinery, electrical machinery and organic chemicals to each other. India's sales of these items grew at the rates of 179.9%, 44% and 24.4%. Chinese exports of these goods to India rose at the rates of 81%, 105% and 46%.
The share of iron ore and slag, which has traditionally dominated the Indian export basket to China, has come down from 57.12% to 50.56%. The share of iron ore, another major item in the Indian basket, has also tumbled from 10% in the first 10 months of 2005 to a mere 2.77% in the same period this year.