India and China : Trade- Areas of concern

India’s imports from China decelerating: Report

News Context:

  • Recently PHD chamber of Commerce has reported that there has been deceleration of demand for China’s products in India, during the April-January period of 2018-19 financial years.

Indo- China Trade

  • China is India’s 3rd largest export destination and largest sources of imports to India.
  • There was a tremendous jump in total trade between the two countries from USD 3 billion in 2001-02 to around USD 90 billion in 2017-18.
  • However, the trend has seen a reversal in the April-Jan 2018-19.

Important facts from the report :Trade between India and China during the April- January 2018 to April- January 2019

  • India’s exports to China grew by 31% (from USD 10 billion to USD 14 billion).
  • India’s import growth from China shrunk from 24% during to (-) 5% .
  • India’s trade deficit with China has also eased from USD 53 billion in April-January 2018 to USD 46 billion in April-January 2019.
  • India’s import items from China (majorly)
    • Electrical equipments
    • Mechanical appliances
    • Organic Chemicals
  • India’s export items to China comprise (Majorly)
    • Organic chemicals
    • Mineral fuels
    • Cotton

Areas of concerns:

  • India is one of the biggest manufacturers of generic pharma products. However, we are unable to export to China because of China’s stringent non-tariff barriers, which needs to  be mitigated.
  • Despite being neighboring countries, India and China witness high trade cost because of extra barriers imposed on agricultural and processed products, which needs to be mitigated to boost the agri-products trade and reduce the ever rising trade costs.

Way ahead

  • In recent years, there has been a shift in taste and preferences for products made in China as well as growing and competitive Indian production capabilities and shift in the consumption patterns of Indian consumers, which is sought to be in favour of India.
  • Although the mounted trade deficit with China is substantial, given the recent trends and amendments in the Foreign Trade Policy 2015-20, the volume of trade deficit is expected to ease in the coming years.
Section : Economics