DNA Money Edit: Trade bonhomie between India and China

Amid the US-sponsored global trade war concerns, India and China, along with a group of other Asian countries, are working out a plan to set up a trading bloc that promotes free trade. India has just opened up the market for Chinese importers with reduced tariffs in response to a similar move by its neighbour, and there is enhanced focus on the Asia Pacific Trade Agreement (APTA). New Delhi slashed import duties on 3,142 items from China and other APTA member countries in response to Beijing's move to reduce tariffs on 8,500 goods, including soybeans, steel and aluminium, among others.

Chinese President Xi Jinping had recently suggested to Prime Minister Narendra Modi that the two countries should target $100 billion in bilateral trade by 2020 with Beijing mulling over imports of non-Basmati rice and sugar to address the trade deficit. In fact, the two countries had earlier set a target of $100 billion by 2015. It reached nearly $90 billion last year, according to data of the Chinese General Administration of Customs in March.

India will have to keep an eye on the ballooning trade deficit with China. It has already grown to $63 billion, India's largest, riding Chinese imports of mobiles and telecom equipment, heavy machinery and home appliances. India can't afford to allow it to grow further.