India not to join global chorus on yuan appreciation

TOKYO: India, mindful of its import dependency, is unlikely to join the global rhetoric urging China to let its currency appreciate. India depends on cheap project imports from China to jump-start its big-ticket infrastructure projects, especially in power.

Disclosing this ahead of a meeting scheduled between Prime Minister Manmohan Singh and Chinese premier Wen Jiabao, a source said the currency issue would have to be dealt within the larger context of growth. “We don’t want drastic solutions that would imperil growth,” he said.

On his part, Mr Singh is expected to put pressure on the Chinese to lower import barriers, both tariff and non-tariff, especially with respect to pharmaceutical imports from India. China is India’s biggest trading partner and enjoys a huge trade surplus, implying that a cheaper yuan will lower India’s import bill.

PM to raise China’s role

“Our imports are now cheaper. We depend on them for large buys in sectors like power,” said the source.

Unlike India, the US economy needs a demand thrust, which it hopes to manage by getting a favourable shift in the yuan-dollar parity that would make US exports more competitive.

India has been maintaining that structural imbalances should get immediate attention. Finance minister Pranab Mukherjee, too, has been making this point in his recent interventions. He has also been speaking out against competitive devaluation of currency. “There is no one shot answer to the problem. The attention now should be on structural issues,” said sources.

In his meeting with Mr Wen, the prime minister will also raise India’s concerns over the growing role of China in Pakistan, particularly PoK. Sources said there has been heightened Chinese activity in PoK. “The Prime Minister will raise the issue and convey India’s uneasiness over these developments,” said sources.

With climate change negotiations reaching a critical stage, India-China talks could explore the possibility of reaching a common ground. In the last round of negotiations, the two countries had worked closely.

Before leaving New Delhi for Tokyo, Mr Singh said India was ready to play its part based on the principles of common but differentiated responsibilities contained in the United Nations Framework Convention on Climate Change, or UNFCCC. He, however, said situation on the pollution front in the two countries was not comparable. “ Forty per cent of our people lack access to commercial sources of energy,” he said.