Ahead of Prime Minister Narendra Modi's meeting with Chinese President Xi Jinping on the sidelines of the BRICS (Brazil, Russia, India, China and South Africa) summit in Brazil next month, the Cabinet on Wednesday approved industrial parks to be set up in India by China.
Law and telecom minister Ravi Shankar Prasad said the Cabinet had given in-principle approval to a memorandum of understanding (MoU) in this regard, adding the details of the agreement would be made public after the MoU was signed.
It is likely the MoU will be signed during Vice-President Hamid Ansari's visit to China on June 26-30.
The matter was extensively discussed during the visit of Chinese foreign minister Wang Yi to India this month, when he had met the PM, as well as External Affairs Minister Sushma Swaraj, senior officials told Business Standard.
During the fifth India-China strategic dialogue in August 2013, both sides had identified five states where the parks would be set up -Uttar Pradesh, Andhra Pradesh, Gujarat, Maharashtra and Karnataka. In October 2013, a Chinese delegation had visited potential sites in these states.
However, the plan was delayed due to resistance from some sections of the Indian industry, especially small and medium enterprises, which were apprehensive the move would give China leeway to dump goods in the market here. And, ahead of the general elections, the United Progressive Alliance government didn't want to risk proceeding with the move.
Officials say the Chinese embassy had written to the Uttar Pradesh State Industrial Development Corporation, seeking 400 acres for the project, with a special focus on manufacturing electronics. It is learnt the Chinese government also approached the Haryana State Industrial and Infrastructure Development Corporation to set up industrial parks in that state.
In December 2013, the Haryana government floated a proposal to set up a Chinese industrial park in that state. It had also offered 500 acres to the Chinese, with single-window clearances to investment proposals exceeding Rs 100 crore.
Apparently, China is keen to set up manufacturing units related to agro-processing and electronics.
The Centre believes the move will help address India's widening trade deficit with China, which has led to the government pushing China to source more products from here. In 2012-13, India's trade deficit with China stood at $40.78 billion, compared with $39.40 billion in 2011-12 and $27.95 billion in 2010-11, according to commerce ministry data.