Both parties agree that all business transactions between the two countries are carried out in accordance with the import, export and exchange rules, which are in force from time to time in their respective countries. 5 The very context of bilateral trade between China and India, both bilateral, regional and global, has changed rapidly. Bilaterally, this is evident in the way their fast-growing trade partnership has given a significant boost to their maintenance of political confidence. After their diplomatic stalemate following India`s may 1998 nuclear tests, their bilateral trade was the first to return to normal.4 However, this boom in their bilateral trade could not have been possible without courageous political initiatives, but in recent years it is the role of their business community that has become much more influential in determining the tone and tone of their political interactions. We used two popular competitiveness criteria (i) Balassas Revealed Comparative Advantage (RCA) 6 and (ii) Trade intensity to identify product groups in which bilateral trade between India and China is not compatible with the overall trade of India and China in that product group. Such waivers could be due to tariff or non-tariff barriers that could undermine a free trade agreement. We carried out this analysis at the two-digit level of the HS (Harmonized Systems) codes. 12 This is the essence of bilateral trade between China and India as a confidence-building measure that must be emphasized to assess its interface with their political relations, which remains so crucial to their long-term prospects. Therefore, it is not only statistics and benefits, but also the political impact of trade that remain the barometer of their economic engagement. Both sides are clearly demonstrating this understanding, at least in their recent initiatives. In addition, with the integration of Indian trade with Hong Kong and Macau (as well as the increase in India`s trade with Taiwan and the possibility of a possible reunification of Taiwan), Greater China has become India`s first and only trading partner. Our analysis shows that a product-based close free trade agreement will be highly china-friendly and unlikely to be accepted by Indian industry. Any bilateral agreement between the two countries must be comprehensive and cross-cutting, encompass not only goods, but also services, investment, research and development cooperation, and be supported by framework conditions on issues such as anti-dumping, standards and dispute settlement.
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