Doklam a far cry, Chinese imports up 33%
MAKING THE CUT Rise in imports as rupee has appreciated about 5.5% against US dollar and 3.7% against yuan CHINA IS ALSO INDIA’S LARGEST BUSINESS PARTNER, WITH TRADE HEAVILY TILTED IN ITS
FAVOUR
Chinese imports to India recorded a 33% jump in the April-June quarter over the same period last year, government data shows, indicating trade remains unscathed by the border standoff between the two countries.
The rise in imports is on the back of a stronger rupee that has appreciated about 5.5% against the US dollar and 3.7% against the Chinese yuan since February. Electronics and engineering goods and chemicals were the biggest imports.
“The political tension that we are witnessing now is unlikely to have any impact on the trade relations between the two countries…it is business as usual for both countries at present and the situation will not change,” DK Joshi, chief economist, Crisil, told Hindustan Times.
The Asian giants are locked in a row in the remote Doklam plateau, which borders Sikkim in India’s northeast and is claimed by both Beijing and Bhutan, since June 16.
Chinese blame India for the two-month long standoff, the longest between the neighbours. It accuses India of trespass and preventing its soldiers form building a road, which New Delhi says is a threat to its security.
China is also India’s largest business partner, with trade heavily tilted in its favour.
During the April-June period, India imported goods worth $18 billion compared to $13.5 billion last the previous year. The appreciation of the rupee allowed Indian importers to purchase larger quantities of goods at lower prices, a report by the State Bank of India said, adding it could have a bearing on the domestic industry. A yuan is trading at ₹9.6.
“The political and economic compulsions are divorced from each other but rights steps need to be taken to encourage domestic industry so that it could generate income and jobs and reduce India’s dependence on imports, giving boost to ‘Make in India’, SBI chief economic adviser Soumya Kanti Ghosh SBI said on Sunday.
The report said the appreciation of rupee against Chinese renminbi enabled Indian importers to purchase larger quantity of goods at lower prices. “We estimate, India on a conservative basis, saved at least $3.9 billion in May 2017 because of stronger Indian rupee,” it said.
Federation of Indian Exports Organisation director general Ajay Sahai was upbeat on business ties. Trade would not be affected by the “current level of political tension”, he said.
But the widening trade deficit — the difference between imports and exports — continues to be a worry. Trade deficit in 2016-17 stood at $51.1 billion compared to $19.26 billion in 2009-10. It means India’s is buying way more than what it sells to China.
For some policy experts though it could be India’s leverage. With its economic growth slowing, China would want its foreign markets to widen. The economy is also the reason China is looking to flex its muscles abroad to bolster confidence at home.