India’s Trade Equation with China

India’s Trade Equation with China

India’s Trade Equation with China


  • India’s trade equation with China has been improving in recent years with outbound shipments rising faster than imports.

What is the reason?

  • This growth in this short period of time is driven by import of some of the key raw materials and to meet demand from high-growth sectors such as telecom and power.

Composition of the trade:

  • More than a third of India’s imports from China are intermediate goods, and 19.3% are capital goods, with equipment for the power and telecom sectors being the main contributors.
  • These imports helped India meet domestic demand in these quickly expanding sectors.
  • Electronic components, computer hardware and peripherals, telecom equipment, telecom instruments, organic chemicals, industrial machinery for the dairy industry, residual chemicals and related goods, electronic instruments, bulk pharmaceuticals, and intermediates are the main imports from China.

What is the Value of the Bilateral Trade?

  • With trade flows between the two nations increasing by 59% from roughly $72 billion in 2014–15 (FY15) to $115.4 billion in FY22, China is one of India’s major trading partners.
  • Since India-China commerce has increased, export growth has outpaced import growth by a significant margin.
  • India’s exports to China increased from $11.9 billion in FY15 to $21.25 billion last year, a 78.1% increase, while the country’s imports increased by $55.8% to $94.16 billion from $60.4 billion in FY15.
  • In comparison, China’s imports climbed 192% between 2006–07 and 2013–14, reaching $51 billion.

Way Forward:

  • Over time, the production-linked incentive programmes for various industries will help lessen reliance on such imports.
  • The post pandemic world which has posed difficult economic challenges is also an opportunity for India to exploit the opportunity in the manufacturing sector given its demographic potential and ties with the west.

Source The Hindu