India voices optimism ahead of China president's visit, eyes investment

By Manoj Kumar

NEW DELHI (Reuters) - Indian officials voiced optimism on Wednesday that a visit by Chinese President Xi Jinping next week will open a new chapter in relations between the Asian giants, with hopes high for investment deals to narrow a yawning trade deficit.

Trade minister Nirmala Sitharaman raised expectations ahead of the Sept. 17-18 visit, saying Xi was likely to announce investments in industrial parks and help set the course for smoother cooperation between the two nations.

"We hope that during this visit the Chinese and Indian relationship of the last 50-60 years would see a directional change," Sitharaman told reporters.

She echoed comments from India's National Security Advisor Ajit Doval. Several newspapers quoted him on Wednesday as saying that ties with China could take an "orbital jump" under the leadership of Xi and India's Prime Minister Narendra Modi.

Speaking in Beijing, Doval, a hawkish former spy chief who is close to Modi, said the two nations' disputed border would also be discussed on the trip.

Although their commercial ties have rapidly strengthened, the two nations still disagree on where their Himalayan border lies, after China beat India in a war in the region in 1962. To this day, each side claims areas of the other's territory.

INDUSTRIAL PARKS

Trade minister Sitharaman said the government was also in talks with Chinese companies to set up production in India.

China plans to invest some $7 billion in two industrial parks in western India, including one in Prime Minister Narendra Modi's home state of Gujarat, Indian media reported last week.

Sitharaman signed a memorandum of understanding to establish the industrial parks during a visit to China in July.

On his first day in India, Xi is expected to visit Gujarat, where Modi headed the state government until becoming prime minister in May.

Two-way trade totalled $65.9 billion last year, but $51 billion of that was exports from China. India hopes that Chinese investment in the industrial parks will offset the deficit and help India emulate its neighbour's success as a manufacturing powerhouse.

Sitharaman said she was also seeking greater market access for Indian products and services in the Chinese market. India has struggled to improve export conditions for its pharmaceuticals and IT services.

"We have discussed a range of issues with China. These also included bullet trains. Whether there will a be agreement or not during the visit, you will have to wait for that," Sitharaman told reporters.

Modi has launched a "Make in India" drive since taking office to drum up foreign investment. He came back from a trip to Japan last week with a promise of $35 billion in infrastructure investment.

(Reporting by Manoj Kumar; Writing by Frank Jack Daniel; Editing by Hugh Lawson)