Context: According to recently released government data the trade deficit of India with China fell to $48.66 billion in FY 2019-20. This dip is due to the decline in imports from China.
Key Points

• India on several occasions has raised concerns about the widening trade deficit with China as the deficit was on the rise for the past two financial years. Also, India was witnessing a rise in FDI from China which would result in more dominance of Chinese firms in the Indian market. 
• In April, the Government of India tightened FDI rules for the countries sharing land borders with India.
• As per the new rule, a company or an individual from a country that shares a land border with India can invest in any sector only after getting government approval.
• Recently, after the violent stand-off at Galwan Valley, India has become more stringent and critical about the trade and business deals with Chinese companies. 

Trade Deficit- 

• The trade deficit stood at $53.56 billion in FY 2018-19 and $63 billion in  FY 2017-18.
• Foreign Direct Investment (FDI) from China in India has dipped to $163.78 million in FY 2019-20 from $229 million in FY 2018-19.
• The imports from China account for 14% of India’ import. The main imports include clocks, musical instruments, toys, sports goods, furniture, plastics, electrical machinery, electronic equipment, chemicals, iron and steel items, fertilisers, mineral fuel and metals. 

FDI from China-

• The FDI from China stood at  $350.22 million in  FY 2017-18 and $277.25 million in FY 2016-17.
• The sectors which received maximum FDI from China during April 2000-March 2020 are automobile ($987.35 million), metallurgical ($199.28 million), electrical equipment ($185.33 million), services ($170.18 million), and electronics ($151.56 million).

Steps by India to check the trade deficit

• It is framing technical regulations and quality norms for several products in order to reduce dependence on Chinese imports and address the trade deficit. 
• It has imposed anti-dumping duties on several goods, which are being dumped in the domestic market at below the average prices from China with a view to guarding domestic players from cheap imports. 
• Over 50 quality control orders (QCOs) and other technical regulations have been notified in the past one year, including those on electronic goods, toys, air conditioners, bicycle parts, chemicals, safety glass,steel and electrical items etc. 
• The government now is accentuating the Make In India initiative. In the recently announced Atma Nirbhar Bharat scheme, Hon’ble PM called for self-dependency and support domestic industries by Vocal for Local sentiments in order to boost the Indian economy and make it less dependable on others.