NEW DELHI • Walk into an Indian market and ask for cheap batteries, or a toy, or even a shirt, and chances are the shopkeeper will offer Chinese products with a rider that they are not very reliable. Talk to senior officials at a top Chinese telecoms company, and ask them about their experience of doing business in India, and you would hear mournful stories of how they were denied deals worth billions of dollars by Indian state firms at the last minute despite having the best bid.

Both are instances that indicate how decades-old mistrust and a lack of understanding between the world’s two most populous nations could hurt the scorching pace at which their business links have grown, experts said.

As businesses in India and China, among the world’s fastest growing economies, set ambitious targets to push their trade, governments in the two countries need to bury the ghosts of the past to help them succeed, they add. And they could start next week when Chinese President Hu Jintao visits India for four days from November 20 on a trip that hopes to build on a burgeoning economic relationship despite a lack of progress on political disputes. “Trade has been expanding rapidly... but at the same time we shouldn’t be blind to the difficulties in relations,” said Zhang Li of the Institute of South Asian Studies at Sichuan University in southwest China.

“Trade in itself is becoming a sensitive subject, especially for India,” he said. “We aren’t at the stage yet where trade dominates relations and puts other things in their place.”

FROM WAR TO ORE

India and China have come a long way since they fought a brief but brutal border war in 1962 that all but froze their relationship until a thaw began to set in in the late 1980s.

This coincided with India’s economic reform programme that was launched in 1991 and led to a surge in bilateral trade: from $260m in 1990 to nearly $8bn in 2003 and likely to touch $20bn in 2006/07. Much of this has been fuelled by a huge Chinese appetite for raw materials such as iron ore, steel, plastics and chemicals and Indian demand for electrical and mechanical machinery, mineral fuel, oil, chemicals and silk. The growth has come with its share of problems, which political analysts and business leaders say the two countries may have ignored initially as they were blinded by its rocketting pace. “There is a great need for transparency on the part of the Chinese,” said Deep Kapuria of the Confederation of Indian Industry. “For instance, there are a number of subsidies which are of a hidden nature in China.”

Indian firms that have done business with China also accuse some Chinese companies of offering better products to Western markets like the United States and low-quality output to Asian countries such as India. Besides, a largescale counterfeit industry is allowed to push cheap but low quality or fake consumer products that can force Indian products out of the market, they say.

This, says Kapuria, reflects China’s poor record of protecting intellectual property rights.Beijing too has its own list of woes. New Delhi, it says, is blocking Chinese investment in areas such as ports and telecommunications citing national security concerns, denying Chinese firms big business deals in the public sector, making it tough to get visas, and not being responsive to a free-trade agreement proposal.

“It is very frustrating,” said a top official of a Chinese telecoms firm, who did not want to be named as he is not authorised to speak to the media. “We are allowed to get only small orders from Indian government companies when we have the capacity to execute projects a dozen times larger,” he told Reuters. “All this talk of friendship is just talk.” Trade experts say India needs to shed its traditional political suspicion of China and appreciate the result-oriented approach of the Chinese.

“In the era before Google Earth satellite pictures, there were fears about foreign firms obtaining information of strategic value,” defence analyst K Subrahmanyam wrote in The Indian Express daily. “Now, such information is easily available. In India, of course, we are still clinging to the ridiculous World War II rules of not permitting photography at airports.”