India on Monday invited China to invest in its new flagship manufacturing zones as part of a push to broaden commercial links and cut a ballooning trade deficit with its Asian neighbour.
India's trade deficit with China, a longstanding economic irritant between the emerging market giants, soared 42 percent to nearly $40 billion in the last fiscal year, while total bilateral trade climbed 27 percent to $75 billion.
"We've invited China to participate in and support the establishment of one or more of the National Investment and Manufacturing Zones," trade minister Anand Sharma said in New Delhi after talks with his Chinese counterpart Chen Deming.
"That is where the opportunities beckon," Sharma said in a speech to Indian and Chinese business leaders, adding the response from the Chinese to the investment proposal had been "positive and encouraging".
The zones are being set up under India's National Manufacturing Policy which aims to boost manufacturing as a percentage of gross domestic product to 25 percent from 16 percent in the next decade.
The policy is part of India's struggle to provide jobs to its growing army of young people.
Chen, in turn, said Beijing, which exports mainly capital goods such as heavy engineering equipment to India, recognised its trade relationship with India was lopsided.
"We want to buy more goods from India to grow our trade relationship in a more balanced manner," he said.
"China and India are both fortunate to have sizeable domestic markets which give us the the opportunity to offset the risks of the weak global economy," he added.
Both nations' economies have slowed due to the global downturn and in India's case to high interest rates, corruption scandals and government policy paralysis that has dampened business activity.
Deming said China's economy was expected "to grow 7.5 percent or hopefully eight percent this year," down from growth of 9.2 percent last year.
India's once-booming economy grew by just 5.3 percent between January and March, its slowest annual quarterly expansion in nearly a decade.
Diplomatic ties between China and India are prickly due to a festering border dispute and the presence of the exiled Tibetan spiritual leader the Dalai Lama in India.
But trade has surged with the two countries targeting a goal of $100 billion in bilateral trade by 2015, even though experts say the trade imbalance is unlikely to improve significantly anytime soon.
The two ministers insisted India and China should see each other as commercial partners and agreed to set up a joint working group to look at how to boost trade and investment
"Let us trust each other," the Indian trade minister said, calling on his Chinese counterpart to take back a "positive message of India's commitment to deepen and diversify its partnership with your great country."
"Both countries will grow at a faster pace through this partnership."