Despite sour relations with China over aggressions at the border, India’s trade relations with the county continues on an upwards trend. India has a trade deficit with China for a long time now, which means India imports far from China compared to exports across the Himalayas. According to reports, India-China trade grew to a record $125 billion in 2021, despite tensions in Ladakh and elsewhere.
Of this bilateral trade, India’s import from China was valued at $97.52 billion, while China’s imports from India was $28.14 billion, resulting in a trade deficit of $69.38 billion for the year 2021. Reportedly, India’s imports from China increased substantially at 46.2% due to increased imports of medical products and raw materials by the pharmaceutical industry due to Covid-19.
While increasing trade deficit with China is concerning given the Modi govt’s push for made in India, it is not as bad as it seems. Because, in recent years, the overall trade deficit had shown signs of decline, and even though trade with China has gone up, the same with other countries have gone up at even higher rates.
The growth in imports from China was minimal in recent years, compared to very high import growth during the UP regime. From 2003-04 to 2013-14, imports from China had increased by a whopping 1,160% which went up from $6.05 billion to $61.60 billion during this period. Compared to that, the imports have gone up by just 8% from 2014-15 to 2020-21. The imports from China in 2014-15 was $60.41 billion, and the same in 2020-21 was $65.21 billion.
In fact, while the trade deficit with China had gone up exponentially during the UP rule from 2004 to 2014, the growth trend has been arrested during the NDA rule from 2014, and had come down in 2020 before going up last year. The trade deficit with China in 2020-21 was $44 billion, down from $48 billion in 2014-15. Although it went up in 2021, as it was mainly fuelled by increased imports of pharma products due to the pandemic, it is expected that it will not be a recurring phenomenon.
The trade deficit with China had gone up by almost 24 times from 2004-05 to 2013-14, which has been substantially controlled during the Modi govt.
Another important point to be noted is that while India’s trade deficit with China comes and control and the import growth rate came down, China’s share in the increase in India’s trade also has also decreased.
For the period January to November 2021, India’s trade with Australia had gone by 102%, while it had gone up by only 44% for China. Trade with several other countries like South Africa, Belgium, UAE, Thailand, USA, Indonesia etc increased at a higher rate compared to China for the first 11 months of 2021.
The growth rate for India’s trade with China was even less than the growth of India’s total international trade, which had gone up by 50% to reach over $290 billion.
This shows that as India has become a major trade partner globally, its trade with all other countries has gone up substantially. And more importantly, trade with other countries have gone up at a much higher rate compared to the trade growth rate with China.
