BUSINESS India could fill gap in agricultural imports amid China-US trade war

BUSINESS

India could fill gap in agricultural imports amid China-US trade war

Global Times

05:13, September 26, 2018

The ongoing Sino-US trade dispute will provide a chance for China and India to strengthen their agricultural trade, which will help to address the trade imbalance between the two countries, experts said on Tuesday. But they cautioned that the high price of India's farming products is still a major obstacle. 

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Indian farmers take part in a bull race at a paddy field in Canning, India. (Photo: VCG)

The Indian government is currently making an effort to promote sales of agricultural goods to potential Chinese buyers, according to information sent by the Embassy of India in China to the Global Times on Tuesday.

"It's very likely that China will turn to India as a replacement market as the Sino-US trade war worsens," Zhao Gancheng, director of the South Asia Studies Department at the Shanghai Institute for International Studies, told the Global Times on Tuesday.

The Indian government is anxious to further unlock the Chinese market, and it has been pushing the Chinese government to drop a seven-year-long ban on rapeseed meal imports, a Times of India report noted on Friday. The report also said that India is hoping to take advantage of the Sino-US trade war by exporting more soybean produce to China. 

Jiao Shanwei, editor-in-chief of cngrain.com, a website specializing in grain news, said that the US was previously the major source for China's soybean imports. But the trade dispute has affected imports of US soybeans, which are used to produce soybean oil and soybean meal in China.

"Soybean oil is not a big problem, as Chinese consumers' demand for it is decreasing. I think the Chinese government can directly import soybean meal from alternative markets and India is a good choice given their sufficient production of such products," Jiao told the Global Times on Tuesday. 

There are other farming products that India is eager to export to China to replace US goods, such as fresh grapes and flue-cured tobacco, according to a report by the Economic Times in August. 

According to Zhao, if China increases its agricultural imports from India, it can help ease the two countries' trade imbalance, which is something that the Indian government has been complaining about for some time.

China imported $12.5 billion worth of products from India while exporting goods worth $51.1 billion to India in the first eight months this year, according to customs data released in September. 

Obstacles remain

But experts also noted that India can't entirely replace the US market in terms of agricultural goods and China still needs to look for other partners amid the trade friction.

"Farming in India is often geologically separated and has a low level of modernization, causing their farming products to have a relatively high price compared with Western products. This will be a major disadvantage for their exports," Zhao said. 

"If the US farming exporters cling on to the Chinese market by means of entrepot trade [exporting to China via a third country] or if the trade dispute doesn't worsen, then I don't think India can compete with US farming products," Zhao said. 

Facing pressure on imports, China is also quickening steps to expand overseas agricultural cooperation. 

China's State-owned grains trader COFCO, for instance, is planning to invest in a port in southern Russia as a grain transhipment terminal, according to media reports. 

"No single country can satisfy China's need for imports of farming products," Jiao said. "China should actively diversify its import channels."

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