Tim Cheston - The Dollar Business Magazine (Oct. 2017, pg 21)
TDB: India has been focusing on strengthening its domestic manufacturing sector. How important is a strong Indo-China economic relationship in this context?
Timothy Cheston (TC): Past research found that a country is more likely to start entering the production of those products which its neighbouring countries are competitive at producing and that is true in India's case too. India's challenge though is the rising inequality amongst the states within India. The products which are being exported from India are not being produced across the country, but in small pockets of a few rich states equipped with specialised knowhow required to manufacture these products which are complex in nature. However, other states remain stuck with low manufacturing capability and make do with the slow trickle of knowledge spreading from the richer states. We expect the states, particularly those with strong social and business relationship with high-income countries, to percolate that knowhow to other parts of India.
On paper, the economic relationship between India and China should be a win-win for both. India could benefit significantly from attracting the knowhow of its neighbour to spur its entry into new product segments. As growth slows in China, China will be increasingly looking to serve the rising demand for goods and services in high-growth states in India
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