India hails China as hi-tech ally

Mr Vajpayee is courting commercial deals in Shanghai

India's Prime Minister Atal Behari Vajpayee has called for his country to form a partnership with China in the information technology industry.

He said it was "self-evident" that India's skills as a leading player in the global software market and China's strong IT manufacturers "provide a natural ground for an effective alliance in the IT industry".

The Indian prime minister was speaking in Shanghai, China's biggest commercial city, mid-way through a week-long official visit to China.

"In combination, rather than in competition, Indian and Chinese IT industries can be a potent force," Mr Vajpayee said.

Trade hopes

India's software industry earns in $10bn a year in exports and includes international firms such as Wipro.

Hopes for improved commercial relations between the two countries got a major boost earlier in the week when India formally recognised China's sovereignty over Tibet.

Mr Vajpayee is accompanied by a large delegation of Indian business people.

Trade between India and China remains modest at just $5bn in 2002, far less than China's trade with the US, Japan or European Union.

However, trade has grown spectacularly in recent years. China's imports from India in the first four months of 2003 were twice the year-earlier level, according to Chinese officials.

As well as making inroads into China's market, where IT usage in industry remains low, analysts say Indian IT firms also view China as a springboard to Japan's software market.

Entry into Japan through China-based ventures would be helped by the fact that Chinese characters form the basis of Japanese script.