The Confederation of Indian Industry (CII) has urged the Government of India to take urgent steps to address issues facing Indian companies in China. "Sectors such as IT, drugs and pharma, and media and entertainment pose several challenges for Indian companies. To contain the rising trade deficit between India and China, CII suggests urgent measures to reduce non-tariff barriers in these sectors," stressed Mr Chandrajit Banerjee, Director General, CII.
In a memorandum submitted to the Government, CII pointed out although bilateral trade rose at a Compound Annual Growth Rate (CAGR) of 15 per cent since 2007-08, the trade deficit has been burgeoning in an unsustainable manner. In 2014-15, the deficit touched $48 billion. According to CII, India is emerging as one of China's fastest growing markets and trade deficit is likely to widen further.
Regarding the IT sector in China, the memorandum points out that Indian firms have had limited success with contracts from State Owned Companies (SOEs). This is largely due to their inability to meet qualifying norms and certifications needed to bid for SOE and government projects, insistence on local entities in some provinces to avail subsidies thus reducing competitiveness, challenges in staff mobility amongst provinces due to 'hukou' system necessitating local offices in each project area, etc.
CII calls for a level playing field for Indian IT companies and suggests identification of select joint pilot projects and joint development of an information platform for business development and academic cooperation in the IT sector.
In the pharmaceutical sector, Indian companies face time-consuming and expensive approval processes and complex post-registration steps including pricing, provincial tendering and hospital listing. Marketing and distribution also pose significant challenges given the large and diverse geography. CII recommends setting up a Chinese regulatory office in India such as the US Food and Drug Administration (USFDA) for direct inspection of Indian facilities with faster approvals.
CII further suggests according recognition of international approvals from agencies such as the USFDA, UKMHRA etc. The above 'fast track' initiative should be focused especially for specific molecules which are not available in China but can be provided by Indian companies at a competitive pricing.
In the Media and Entertainment sector, Indian industry has made a limited foray into the Chinese market. CII appreciates the recent landmark agreement on co-production of films. India can also make significant gains through direct release of more Indian films such as the highly-successful movie '3 Idiots'. The movie raked in USD 1.9 million in first 2 weeks of release despite a 2 year gap from the theatrical release in India. It established an instant connect with youth who identified with common issues faced by students in both countries.
A key reason for the limited success of Indian films in China is the imposition of an annual quota of 34 foreign films under the "imported movies" category which is dominated by films from Hollywood.
CII suggests that Indian and Chinese film companies should take advantage of the co-production treaty between India and China. Similar collaboration for television content should be explored as well.
Finally, the CII memorandum suggested government support to marketing efforts by Indian industry to organize industry seminars, trade fairs, award ceremonies, etc. in collaboration with relevant industry bodies. This may include fast tracked visas for relevant personnel organizing/ participating in these initiatives, fast tracked approvals for events, etc.
May 12, 2015