• India’s trade with China in 2021 crossed USD125 billion with imports from China nearing a record USD100 billion, underlining continued demand for a range of Chinese goods, particularly machinery.
  • This is when the relations hit a new low due to the prolonged standoff by the militaries in eastern Ladakh.

Important points:

  • India’s biggest exports to China in recent years were iron ore, cotton and other raw material-based commodities, which have seen a recovery in demand in China last year (2021).
  • India has imported large quantities of electrical and mechanical machinery, Active Pharmaceutical Ingredients (APIs) auto components and, over the past two years, a range of medical supplies from oxygen concentrators to Personal Protective Equipments (PPEs).
  • The 43% year-on-year growth in bilateral trade with India was among the highest among China’s major trading partners.
  • Trade figures with China’s top three trading partners showed growth of 28.1% with ASEAN (to USD 878.2 billion), 27.5% with the European Union (to USD 828.1 billion), and 28.7% with the United States, to USD 755.6 billion.
  • The trade deficit for India grew to USD 69.38 billion in 2021.
  • India has been highlighting its concerns over the growing trade deficit with China for over a decade and calling on China to open its markets for India’s IT and pharmaceutical products.
  • Trade deficit refers to a situation where the country’s import dues exceed the receipts from the exports.

Way Forward

  • To reduce the dependence of Chinese products, India needs to analyze imports from China, and develop the way forward.
  • Further, based on the economic complexity model, the Indian government can formulate proper road maps through compartmentalizing them as per technology and innovation capabilities.


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