DHAKA: India has moved a step closer to establishing industrial parks with China, the country’s law minister said on Wednesday, as New Delhi looks to rebalance a US$40 billion trade deficit with its northern neighbour.

Ravi Shankar Prasad told reporters that India’s cabinet had approved in principle a memorandum of understanding between the two countries for setting up the parks.

The details of the agreement would be available only after the memorandum was signed, Prasad said, but the expectation is that China will invest in low-tax special economic zones and manufacturing hubs in India, which would reduce the need for India to import Chinese goods.

While New Delhi has long pushed for greater market access to cut the deficit, pushing through a firm agreement to bring Chinese investment into India would signal the intent of new prime minister Narendra Modi’s push to expand manufacturing and revive the country’s flagging economy, reports The Straits Times.

BDST: 2127 HRS, JUNE 25, 2014