As part a special discussion series, Engaging The Dragon, that covered Prime Minister Narendra Modi’s recent China visit, CNBC-TV18’s Shereen Bhan talked to members of the Indian and Chinese industries to try and find out why the trade between the two countries has been lopsided over the past many years and how to balance it.

While bilateral trade between the India and China has more than doubled in the past seven years, the deficit too has ballooned – standing at a whopping USD billion in 2015.

CNBC-TV18 hosted a panel discussion with Sumit Mazumder, President, CII; James Dong, Assistant President of Alibaba; and Chandrajit Banerjee, Director-General, CII.

Below is the transcript of the interview on CNBC-TV18.

Q: There has been a lot of hype and a lot of expectation around Prime Minister Modi’s visit to China and before that President Xi’s visit to India. Prime Minister Modi is good at coining these terms and so he said, ‘Inch India and China towards miles, which is the millennium of exceptional synergy’. However, beyond talk, let us be realistic about what is translated in terms of action on the ground. We are still talking about a high task force that has been setup to try and address the issues, the issues that we have already known about and we have known about for a very long time.

Mazumder: One demonstration of what has happened was on the MoU that was signed over here today. You would probably next say how many MoUs really materialised but even if 50-70 percent materialises, it is that much in that direction. The issue that we are faced with right now is the imbalance in trade and everyone is extremely concerned about it and we have to find a solution.

There is some way we have got to find where China increases their investments with us rather than just looking at us as a place to export goods. It is to China’s interest and India’s interest in the long-term considering both the economies are very large economies; at least in the numbers of people.

So, it is very important that this imbalance is corrected soon. I think this recognition on the Chinese leadership part, this needs to be done. So, I would expect that we would see some action.

Q: We have been talking about these issues for a while now and we haven’t seen any significant forward movement. However, since you touched on the issue of MoUs and we know that 21 MoUs have been signed but there is no free lunch. These are MoUs for infrastructure financing; project financing and they come with riders. You will have to buy Chinese equipment, you will have to source from China at least as part of a large number of those MoUs are concerned. So, once again more beneficial to China than India or is it a win-win?

Mazumder: I would expect that the businessmen who have signed this have signed it only after it makes sense to them. They are not out there to make the Chinese government happy or the Indian government happy. For them it is a pure business transaction. So, I would expect they have done their due diligence and it should be a win-win. I don’t have the details of all the projects but a businessman would do that is what I would expect.

Q: We are starting to see some of that happen; we have got 100 Chinese companies who have set up offices in India, the Haiers of the world, the Huaweis of the world. Companies are now looking at actually setting up local assembly or manufacturing facilities in India because the government is dis-incentivizing exporting from China into India. For instance mobile phone manufacturing Gionee is now looking at setting up an assembly plant in India. What will it take for Chinese investment to come into India?

Dong: India has been very popular in terms of investments. You have recently saw Alibaba make an investment as well together with some of other companies in the major industries. However, there is another part of the business probably that the media has not seen that much in the past because. I am here-we are presenting Alibaba B2B business, this platform is the oldest business in Alibaba Group. We started in 1999. We help small and medium enterprises (SMEs) to do business easier everywhere in the world. So, in the past 16 years we helped a lot of Chinese SMEs to grow from very small to big. Sometimes we heard successful stories about Chinese companies start from scratch and in two-three years, they came out with an IPO through the help of the platform.

Now, actually we already have a B2B presence in India, we have four offices and a lot of employees and we actually have very strong partner with CII to get them to help us to expand our business in India.

Q: Would your expansion in India also happen via the inorganic route because that has been the big speculation in India? Is Alibaba going to come up and pick up one of the Indian start-up B2B companies?

Dong: For B2B, the current focus for us is really-- in the past we have tested the model how we serve India SMEs. In the past [we did it] through our own capacities, we built our own offices and staffs there. The demand has been proven to be successful. Now we are trying to expand this through the partnership with really strong local partners like CII because they are one of the strongest chamber in India. So through their network we can access the community and also get their help on education, training of all those SMEs so that we can serve more of them and then get them to on platform and then export to the world including China.

Q: In your conversations with your counterparts here in China, what is it that they tell you in terms of obstacles to investing in India? The conversations that I have had with some people here seem to suggest that there is a trust deficit and that comes in the way. There are legacy issues which come in the way. What is the single biggest obstacle today which deters Chinese investment in India?

Banerjee: You are right, we need to be much more open and that is the direction that we are looking at. If you really go back as to what the Prime Minister once said that, when you are really trying to get foreign direct investments into India from a particular country, you need to cater to that country very specifically. So, there are certain cultural issues that you really need to rule out.

So, here when we are looking at industrial paths which have been actually getting devoted to China and let them come into some of the special projects and I would think that today when we are seeing ports project where China is coming in, that is the type of trust that we need to have between each other to let them to come into some of the important areas…

Q: [Interrupts] Do you see India in that sense welcoming Chinese investment into strategic projects. Let us take a look at the telecom sector for instance, it is a sensitive sector but it doesn’t really have to weighed down by legacy issues but it has Chinese investments in the telecom sector has been met with or dealt with poorly I would say on account of issues dealing with national security and so on and so forth.

Banerjee: What one would like to see is more of these projects actually coming in India and would be able to facilitate that. Today if you look we are riding on “Make in India” and this entire campaign on “Make in India” would facilitate and fast track some of the bigger projects coming in from China and that is what we would expect to really take off from here.

Some of the MoUs that you saw get signed today have touched points even in sectors like ports, telecom which is an interesting development. If we can see that happen and if we can see territories like industrial parts where we are facilitating more of Chinese investments coming in, that would be a very important and a good beginning to see Chinese investments coming in.

It would also help us over a period of time to address the issue of trade deficit. Trade deficit cannot be wiped out off by tomorrow. So, we need to have this to be a very important strategic move to see to it that we are able to bridge that gap.

Q: What is it that you would expect from this task force that has been setup by both governments to try and address this issue, what is it that you would like to put on the table. I know that CII has put forward several recommendations in terms of what both countries ought to do at thus point in time, what should be the highest on the priority list?

Mazumder: Highest on the priority I would say is the trust deficit between the two countries. Once you can build on the trust deficit in the two countries the rest will fall in place. As an entrepreneur you are looking for opportunities.

Q: Should the Indian government for instance adopt a carrot-and-stick approach? We just talked about how you are dis-incentivising importing mobile phones into India by hiking the customs duties for instance. Should that be the approach of the Indian government to dis-incentivise imports into India from China?

Mazumder: If you look around the globe most countries have some sort of a barrier to entry when the requirement is such. So, I wouldn’t say it is dis-incentivising, it is what the market required that the action was taken. What I really believe is that if the trust factor can be built and if the two countries and people trust each other business will flow and all the other issues that seem to trouble the two countries would all get sorted out and we would see more investments from the Chinese.

Because the Chinese have advanced in a lot of fields that India is still working on, infrastructure is a great example. Even in infrastructure if the Chinese could come in and invest and even do the work or do it in joint venture or whatever form it would really unlock a huge opportunity.

Today, as you and I know that a lot is being done on the infrastructure field but it is really not happening because of historical reasons. So, we have got to get out of this whirlwind we have got stuck in, we need to get out of it. So, that is one area where we can really do work. However it is that trust factor that we need to bring in, so that people are open with each other and look at business as purely a business deal.