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INDIA CHINA

Capital city New Delhi Beijing

Total area 3,287,590 sq km 9,596,960 sq km

Population 1,147,995,904 1,330,044,544

Population growth rate 1.578% 0.629%

Literacy rate 61% 92.2%

Government type Federal Republic Communist State

Currency 1Yuan = US $ 6.9385 1 Rupee = US $ 54.77

Source: CIA World Fact book

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Economic Indicators China India USA

GDP (current

exchange rate)$4.22 trillion $1.237 trillion $14.33 trillion

GDP (per capita) $6,100 $2,900 $48,000

GDP composition

Agri - 10.6%

Industry - 49.2%

Services - 40.2%

Agri - 17.2%

Industry - 29.1%

Services - 53.7%

Agri - 1.2%

Industry - 19.6%

Services - 79.2%

Forex Reserves $2.033 trillion $274.2 billion $70.57 billion

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Economic Indicators China India USA

Exports $US 1.645 trillion $US 175.7 billion $US 1.337 trillion

Imports $US 1.156 trillion $US 287.5 billion $US 2.19 trillion

Current Account

Balance$US 368.2 billion - $US 38.39 billion - $US 568.8 billion

Public Debt15.7% of GDP = $US

O.66 trillion

54% of GDP= $US 0.66

trillion

60.8% of GDP = $ US

8.71 trillion

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Measures China India USA

Labor Force 807.7 million 523.5 million 155.2 million

Oil production 3.725 mn bbl/day 880,500 bbl/day 8.457 mn bbl/day

Oil Exports 399,000 bbl/day 450,700 bbl/day 1.165 mn bbl/day

Oil Imports 4.21 mn bbl/day 2.159 mn bbl/day 13.71 mn bbl/day

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Infrastructure

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China India USA

Roadways 1,930,544 km 3,316,452 km 6,465,799 km

Railways 75,438 km 63,221 km 226,612 km

Waterways 110,000 km 14,500 km 41,009 km

No. of Airports 467 346 14,947

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Port Rank Containers Handled in

2007-08(in mn TEUs)

Singapore Port 1 27.9

Shanghai (China) 2 26.15

Hong Kong (China) 3 23.88

Shenzhen (China) 4 21.09

Busan (South Korea) 5 13.27

Rotterdam (Holland) 6 10.79

Dubai (UAE) 7 10.65

Kaoshiung (China) 8 10.25

Hamburg (Germany) 9 9.9

Qingdao (China) 10 9.46

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There are 3 ports of USA among the 20 largest container ports

of the world.

Port Rank Containers handled in

2007-08 (in mn TEUs)

Los Angeles 13 8.4

Long Beach 15 7.3

New York 19 5.4

No Indian port features among the top 20.The Jawaharlal Nehru Portin Navi Mumbai is the largest container port of India.It handled 1.5 mn TEUs in 2007-08.

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Steel

Coal

Electricity

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Country Rank 2008 2007 % 08/07

China 1 502.0 489.2 2.6

Japan 2 118.7 120.2 -1.2

United States 3 91.5 98.2 -6.8

Russia 4 68.5 72.4 -5.4

India 5 55.1 53.1 3.7

South Korea 6 53.5 51.5 3.8

Germany 7 45.8 48.6 -5.6

Ukraine 8 37.1 42.8 -13.4

Brazil 9 33.7 33.8 -0.2

Italy 10 30.5 31.5 -3.4

in million metric tonnesProduction

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Country Rank Coal Reserves Share (in%)

USA 1 246,643 27.1

Russia 2 157,010 17.3

China 3 114,500 12.6

India 4 92,445 10.2

Australia 5 78,500 8.6

South Africa 6 48,750 5.4

Ukraine 7 34,153 3.8

Kazakhstan 8 31,279 3.4

Poland 9 14,000 1.5

Brazil 10 10,113 1.1

Reserves in million tonnes

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Country Rank 2007

China 1 2549

USA 2 981

India 3 452

Australia 4 323

South Africa 5 244

Russia 6 241

Indonesia 7 231

Poland 8 90

Kazakhstan 9 83

Production in million tonnes

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Country Rank Production in 2007

USA 1 4.167 tr KWH

China 2 3.256 tr KWH

Japan 3 1.195 tr KWH

Russia 4 1.016 tr KWH

India 5 665.3 bn KWH

Brazil 6 437.3 bn KWH

UK 7 371 bn KWH

South Africa 8 264 bn KWH

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Country Share of coal inelectricity prod.

South Africa 93%

China 78%

India 69%

USA 50%

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Automobile

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Country Rank 2007- 08

Japan 1 11

USA 2 10.5

China 3 8.1

Germany 4 6

South Korea 5 4

France 6 2-3

Spain 7 2-3

Brazil 8 2-3Canada 9 2-3

Mexico 10 2-3

India 11 1.95

Production in million units

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Auto Manufacturer Profit Q308 Sales Q308

(in units)

Profit Q307 Sales Q307

(in units)

Maruti Suzuki Ltd. Rs 2135.7 mn 173,494 Rs 3934 mn 201,738

Tata Motors Rs -263.26 cr 98,760 Rs 499.05 cr 144,608

Toyota - $ 1.8 bn 1,840,000 $ 4.58 bn 2,283,000

GM -$ 2.5 bn 2,100,000 - $ 39 bn 2,359,551

Ford -$ 129 mn 1,174,000 -$ 380 mn 1,487,000

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Auto Manufacturer Sales (in units) in 2008

FAW - Volkswagen 467,212

Shanghai Volkswagen 431,771

Chery Automobile 259,651

This reflects the dominant position of the Volkswagen group

in the passenger vehicle market of China. Other prominentmanufacturers in China are Geely Automobile andGuangzhou Toyota.

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Country Car sales in Jan;09

(in units)

China 735,000

USA 656,976

India 110,212

This was the first time that the number of cars sold

in China surpassed the number of cars sold in USA.

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Some Facts

INDIA

Total Geographical Area -

3,287,590 sq km

Arable land: 48.83%

Major Crop Production

Rice136.5 mn tonnesWheat- 78 mn tonnes

Sugarcane - 355 mn tonnes

CHINA

Total Geographical Area -

9,596,960 sq km

Arable land: 14.86%

Major Crop Production

Rice - 182 mn tonnesWheat96.2 mn tonnes

Sugarcane106 mn tonnes

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Chinese agriculture scenario

STRENGTHS

China, the world's biggestagricultural country in terms of

farm population.

Increase spending on agriculture

by over 20 percent in last 3 years.

OPPORTUNITIES

Potential to increase grain output

Organic farming.

WEAKNESSES

Large population.

Estimated loss of one-fifth of

agricultural land since 1949

Arable land loss due to

deforestation.

THREATS

Severe droughts- hit by the worstin 50 yrs recently (N.China).

Water level in dams lowered.

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Indian agriculture scenario

STRENGTHS

Rich Bio-diversity

Climate

Strong and well dispersedresearch and extension system

OPPORTUNITIES

Budget focus on agriculture.

Agro-based Industry

Untapped potential in the N.E.

WEAKNESS

Fragmentation of land

Poor Infrastructure

THREATS

Unsustainable Resource Use

Imports

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Financial Sector Regulators

India Banking Reserve Bank of India (RBI)

Capital Markets Securities Exchange Board of

India (SEBI)

Insurance IRDA

China Central Bank: The People Bank of China (PBOC)

Securities industry:

China Securities Regulatory Commission (CSRC)

Insurance industry:

China Insurance Regulatory Commission (CIRC)

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Issues and Challenges - China

The Bank of China' s outstanding loans stood at nearly 1.6

trillion yuan (235.3 billion U.S. dollars) by the end of

January, up 87.29 billion yuan compared with the

beginning of the year.

Unemployment at 4% officially, but including migrants can be

at 9%

Inflation: 4.8% for 2007, and 7.1% for Jan.,2008

Hit due to slow down in big economies especially USA

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Policies to meet challenges

Redistributing fruits of economic growth to remove inequality in

income.

Shifted from a tight monetary policy implemented in early 2008 to a

moderately easy one as the international financial turmoil spread in the

later half of the year

Enhancing financial support to maintain economic growth.

The latest interest rate cut brought the one-year lending rate to 5.31%

and the one-year deposit rate to 2.25%. (9th march, dow jones business

news)

Bank cut its reserve ratio after repeatedly increasing it in 2007 and

early 2008.

To offer more loans to smaller enterprises.(6th

march, reuters)

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Issues and Challenges India

Financing SMEs

Rural Consumer Financing

Large Financing Demands for Infrastructure Investment

Banks will Need More Capital to Expand

Management of Volatility in Capital Flows

Measures Needed for Preserving Financial Stability

Policies to meet Challenges

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Policies to meet Challenges

Credit Information Bureau Act (CIBIL)

Emphasis on Micro Finance

Increase in FDI limits

Continuing with Composite Objective-

i. Price Stability

ii. Sustained Economic Growth

iii. Financial Stability

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COMPARISONS INDIA - CHINA

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FACTORS DEMAND

RELATED AND

SUPPORTINGINDISTRIES

FIRM

STRATEGIES,

STRUCTURE

AND RIVALRY

HIGH PROFILE

HUMAN RESOURCESBACK-OFFICE

HIGH R&D

INVESTMENTS AND

CAPABILITIES

GROUND UP

STRATEGY

SKILLED LABOUR

SOPHISTICATED

CONSUMERS AND

INDUSTRIAL BUYERS

SOFTWARE R&D

CENTRES/LABS AND

SOFTWARE TRAINING

INSTITUTES

HOMEGROWN

ENTREPRENEURSHIP

HIGH LEVEL

INFRASTRUCTURE,

(RELIABLE/SATELLITE

TELECOMMUNICATIO

N) AVAILABILITY OFFAST

DIGITAL

TELECOMMUNICATIO

N LINKS

INTERNALENTREPRENEURSHIP

ROBUST

INFRASTRUCTURE(TELECOM, POWER

AND ROADS)

HIGH COMPETITION

IT PARKS

(BANGALORE,

HYDERABAD,CHENNAI, PUNE,

FAVOURABLEFOREIGN POLICY

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FACTORS DEMAND

RELATED AND

SUPPORTING

INDUSTRIES

FIRM

STRATEGIES,STRUCTURE AND

RIVALRY

UNSKILLED AND LOW

COST LABOURDIRECT INVESTMENT

LOW R&D

CAPABILITIES

STATE INVOLVMENT

BASIC INDUSTRIAL

INFRASTRUCTURE

INTERNAL DEMAND

(STATE OWNED

INDUSTRIES)

DEPENDENT ON

FOREIGN

TECHNOLOGY

GROWING

COMPETITION

BETWEEN ,

INDIGENOUS FIRMS,

AND GLOBAL

MULTINATIONALS

CHEAP RAW

MATERIALS

EXTERNAL DEMAND LARGE NUMBER OFSTATE OWNED

INDUSTRIES

EXTERNAL

SOURCE OF

TECHNOLOGY

DEMAND OF LABOR

INTENSIVE

PRODUCTION

MASS PRODUCTION

BASED ON ECONOMY

OF SCALE

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INDIA before CHINA before

Semi-socialist autarkic economy Socialist economic system

Difficulty to set up a new business due to

high protectionState-owned domestic enterprises

Foreign investment not welcomedStrict control

INDIA now CHINA now

State planning through 5 Year Plan 3 Step Development Strategy

Reduced control on foreign trade and

investment

Government supervision through indirect

guidance of a more dynamic economy

Privatization trend

Many institutions to control and

supervise(People's Bank of China, National Development and Reform

Commission, Ministry of Finance)

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Last year, the Forbes 200, an annual ranking of the worlds best small

companies, included 13 Indian firms but just 4 from mainland China.

A report issued in 2000 by the Chinese Academy of Social Sciences

concluded that, private and individual enterprises have a lower political

status and are discriminated against several policies and regulations.

In a recent survey of leading Asian companies by the Far Eastern

Economic Review (FEER), India registered a higher average score than

any other country in the region, including China.

In a World Bank study published last year, only 52 percent of the Indian

firms surveyed reported problems obtaining capital, versus 80 percent ofthe Chinese companies polled.

As measured by exports/GDP ratio, China was already more open than

India in 1982.

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If India has so clearly surpassed China at the

grassroots level, why isnt Indias superiority

reflected in the numbers? Why is the gap in GDP

and other benchmarks still so wide?

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1. Its the history; Indias economic reforms only began in 1991,more than a decade after China.

2. India has had to deal with a national savings rate half that ofChinas and lesser FDI.

3. Moreover, India is an extensive, messy democracy driven by

ethnic and religious tensions.

4. Indias over-regulated labour market

5. India has also had a longstanding, volatile dispute withPakistan over Kashmir. China, on the other hand, has enjoyedtwo decades of relative tranquility, it has been able to focusalmost exclusively on economic development.

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Comparing India and China, India is

doing a superior job in utilizing their

resources and exploiting theinstitutional advantages.

China and India have pursued different development strategies.

China used the fastest route to reach economic development which

is foreign direct investment (FDI).

Indeed, Indias homegrown entrepreneurs may give it a long-termadvantage over the Chinese inefficient financial system and capital

market.

Indias strategy may enable it to catch up with and perhaps even

overtake China.

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Answers are now well-known

Walk on Two Legs

Traditional Labor-intensive Industry

Labor market reforms Infrastructure (power)

Fiscal deficit

Modern IT Industry

Higher Education

Urban infrastructure

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Looking Ahead: An India-China FTA?

If India and China want to take the bilateral road as they arecurrently doing, better to have a bilateral with each other

Rapidly growing India and China are windows of opportunitiesfor each other.

Huge potential in bilateral trade, linking 1/3 rd of humanity

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Strategies for future bilateral trade

For existing commodities in trade, penetrate regions in china.

India can be lowest cost producer to china in areas like education,

professional and financial services.

China location, culture and human resources can provide India a

springboard to enter Japanese and Korean markets.

Leverage Indian technology and management in conjunction with Chinese

low cost labor and excellent infrastructure.

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Trade facilitation

Reduce shipping and container costs

Move towards EDI (Electronic Data Interface) in customs

administration

Mutual Recognition Agreements on standards

Bilateral agreement on investment with investor protection .

Use MIGA best practices as both members of MIGA

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Engines of global growth

1/3rd of humanity demanding goods and services from the world

1/4th of high skilled labor providing goods and services to the world

In 2025, combined gdp of both would be equal to that of g7 minus US(Japan, Germany, France, UK, Canada and Italy).

India and China cannot afford to ignore each other..

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