Rise in India’s Bilateral Trade with China

As per Chinese government data, India’s bilateral trade with China has increased to 43.3 percent in 2021, despite India’s measures to reduce dependence on imports from China and increased emphasis on self-reliance.

Key Points

• India’s imports from China increased to USD 97.5 billion in year 2021. In 2020, the import was USD 66.7 billion, which increased by 46.1 per cent in 2021.
• Imports in 2021 increased by 30.3 per cent, as compared to 2019.
• India’s exports to China also increased to record high of USD 28.1 billion in 2021. It increased by 34.9 per cent, against 20.9 billion in 2020.
• India’s Exports to China in 2021 were 56.5 per cent higher, as compared to 2019.
• India’s total trade with China was USD 125.7 billion, in 2021.

Widening Trade Deficit

The widening trade deficit between both the countries is a cause of concern. India’s imports from China are around four times its exports in value terms. India’s export basket comprises of primary goods. On the other hand, imports from China are dominated by value added items.

India’s dependence on China

The bilateral trade has increased despite moves taken by Government to reduce India’s dependence on Chinese imports, following border clashes between both the country. After a violent clash in June 2020, India’s Union Power Ministry imposed a ban on import of power equipment from China. State-owned telecommunication companies, BSNL and MTNL, were also asked to exclude Chinese telecom equipment firms. Government also blocked social media app TikTok and 58 other Chinese apps in India. In 2021, government converted the blocks into permanent bans. Foreign direct investment (FDI) rules were also modified, in a bid to prevent opportunistic takeovers of domestic firms by Chinese companies.

India’s largest trading partner

As per India’s Union Commerce Ministry, China was India’s second largest trading partner during April-November 2021, after the US. The UAE, Saudi Arabia, Hong Kong and Iraq were other top trading partners for India during this period.

Key Imports from China

Some of India’s imports from China include- smartphones, telecom equipment, components for smartphones & automobiles, active pharmaceutical ingredients (APIs), plastic & metallic goods and other chemicals.