Sept. 16 – A Federation of Indian Chambers of Commerce and Industry (FICCI) delegation, with representatives of more than 20 companies, is in Beijing this week to help Indian companies penetrate the Chinese market. The group has urged China to improve market access for Indian companies in the face of persisting problems in a number of sectors, ranging from agro-processing to information technology, and a widening trade deficit.

Indian officials say Beijing’s reluctance to improve market access in the higher-value sectors is a large part of the problem. Nand Khemka, the head of the delegation and Chairman of India’s Sun Group told the Hindu that the aim of the visit was to promote Indian companies in sectors such as financial services, information technology and agro-processing, which enjoyed little success in China so far. “Improving market access will help bridge the trade deficit,” Khemka said.

During the visit, Indian concerns about long-pending market access issues in a number of sectors will be conveyed to Chinese authorities, officials said.

“It cannot be that Indian industry is competitive everywhere in the world except in China,” said S. Jaishankar, India’s ambassador to China. “While trade volumes have been impressive, from the Indian perspective, the prospect of large and recurring trade deficits is a natural source of concern.”

The trade gap has continued to grow this year, with falling demand from China’s recession-hit industries for raw materials from India. India’s exports to China fell by 50 percent in the first six months of 2009, while Chinese exports fell by 16 percent, doubling the value of Indian exports. The trade deficit in the first half of this year was US$6.14 billion, well on its way towards surpassing last year’s deficit of US$11.2 billion.

According to The Hindu, a number of Indian IT companies, from Infosys to Tata Consultancy Services, have opened offices in China, but have found it difficult to establish a foothold and have only enjoyed infrequent success.

“Trade talks are always about reducing barriers and people asking for more,” says Chris Devonshire-Ellis, managing partner for Dezan Shira & Associates in Mumbai and publisher of 2point6billion.com. “We see companies from India are now more prepared than ever to enter the China market. India is the leading producer of many commodities, such as cotton, that China is also a major importer of, and increasing Chinese domestic consumption is now a factor that many Indian manufacturers can now be certain of.”

Devonshire-Ellis, whose firm has clients with the FICCI delegation, believes that while the delegation will likely put pressure on China to open up more, its main role will be exploring opportunities for Indian businesses in China.

Indian companies wishing to explore opportunities and costs associated with establishing a presence in China may contact Dezan Shira & Associates’ offices in India at india@dezshira.com or visit the firm’s web site.