It is unclear if the MoU will be signed during the five-day visit of vice-president Hamid Ansari to China starting on Thursday. New Delhi: Chinese industrial parks in India could become a reality in the near future, with the Union cabinet on Wednesday giving its “in-principle” approval for a memorandum of understanding (MoU) to be signed with the northern neighbour. It is unclear if the MoU will be signed during the five-day visit of vice-president Hamid Ansari to China starting on Thursday. Minister of state for commerce Nirmala Sitharaman is also part of the entourage. “We shall be telling you the details and the contours of those once it is decided,”
Ravi Shankar Prasad, minister for communications, information technology and law told reporters. Among other decisions, the cabinet also increased the minimum support prices (MSP) for a slew of kharif crops. Ansari is off to China to attend the 60th anniversary celebrations of the Panchsheel treaty between India and China. The treaty, signed between prime ministers Jawaharlal Nehru and Zhou Enlai, was seen as the basis for relations between Asia’s two largest countries when it was signed in 1954. The idea of setting up Chinese industrial parks in India first came up in May 2013 when Salman Khurshid, who was then external affairs minister, visited Beijing. Prime Minister Narendra Modi has repeatedly spoken about his desire to make a hub for manufacturing, a field where China has a reputation of being the world’s factory. Uttar Pradesh and Andhra Pradesh are two possible states where the park could come up, according to Indian officials.
Investments from China since 1991, when India opened up its economy, is a mere $469 million, in contrast with $16-17 billion from Japan. (The Japanese figures do not include investments in the infrastructure sector like the Delhi-Mumbai Industrial Corridor.) India and China share prickly political relations, thanks to an unsettled border row dating back to 1962. Trade has boomed, though. In 2013-14, India imported goods worth $51 billion from China, and exported good worth $14.86 billion back to China. India has been seeking market access to China for its pharmaceutical and information technology products, areas in which it has an edge. Both sides have set a bilateral trade target of $100 billion by 2015. The cabinet also increased the MSP for kharif crops between Rs.30 and Rs.100 per 100kg, as recommended by the Commission for Agriculture Costs and Prices (CACP). The cabinet committee on economic affairs (CCEA) raised the MSP for paddy, the main kharif crop, by Rs.50 to Rs.1,360 per 100kg for this crop year. The MSP for pulses—tur, urad and moong—was increased by Rs.50, Rs.50 and Rs.100 per 100kg, respectively. CCEA, however, retained MSP for bajra and maize at Rs.1,250 and Rs.1,310 per 100kg, respectively. For cotton—both medium staple and long staple—MSP was raised by Rs.50 to Rs.3,750 and Rs.4,050 per 100kg, respectively. When asked if higher MSP would push up food inflation, minister Prasad said: “I do not think rise in MSP is directly linked to inflation… We are taking several measures to control inflation. In view of the possibility of a below-normal monsoon, the government has got into the act and taken several steps to control prices. We have accepted the recommendation of CACP in toto. We have given best possible deal to farmers.” Analysts, however, seemed to have reservations. “This is going to be a challenging year.
The government will need to resort to proactive food management like releasing of foodgrains or import in order to limit the impact of the increase in MSP on food prices, especially keeping in mind the bad progress of monsoon, increase in train fares and expected increase in fuel prices,” said D.K. Joshi, chief economist at Crisil Ltd, the Indian arm of Standard and Poor’s.