Raw materials, minerals prop up India’s exports to China
In FY24, overall exports to China rose 8.74% to $16.67 bn while imports grew 3.29% $101.75 bn
India’s exports to China increased by 8.74% from $15.33 billion in FY23 to $16.67 billion in FY24 while imports from the neighbour rose 3.29% to $101.75 billion in FY24 from $98.51 billion in FY23, a large trade deficit that continued to cause concern even though it narrowed marginally.
Ajay Srivastava, founder of Global Trade Research Initiative (GTRI), said, “India’s trade with China is a continued concern. In FY24, India’s exports to China were $16.67 billion, even lower than in FY19, and consisted mainly of raw materials and minerals.”
Meanwhile, imports from China grew from $70.3 billion in FY19 to $101.75 billion in FY24.
Over the past five years, India’s trade deficit with China has totalled more than $387 billion, he said.
“India’s reliance on China is expected to increase due to rising imports of materials for solar energy, electronics and electric vehicles. Additionally, many Chinese companies in India are likely to prefer buying supplies from China,” Srivastava added.
China’s economy has been grappling with significant challenges, including declining property investment, mounting debt and weak consumption growth.
In calendar year 2023, China’s merchandise exports contracted in dollar terms for the first time since 2016, taking overall exports down 4.6%, the commerce ministry data indicated. Total merchandise imports by China also declined 5.5% in 2023. Key Indian-made items shipped to China that saw significant growth in FY24 included iron ore, cotton yarn, cotton, quartz, unwrought aluminium and sanitary items.
Queries emailed on Thursday to the commerce ministry spokesperson and the Chinese embassy were not immediately answered.
India’s merchandise trade deficit narrowed to $15.6 billion in March from $18.71 billion in February and $16.02 billion in January, the ministry data showed.
This was the lowest in 11 months. The last time the deficit was lower was in April 2023, when it came in at $14.44 billion.
India has been trying to shiftitstradestrategyaway from China by looking to sign free-trade agreements with other major economies.
Negotiations are underway with countries such as the US, UK, Australia, UAE, Japan, Peru, Chile and Asean countries. By the end of 2024, India would have signed, or be close to signing, free trade deals with all major economies except China.
India and China trade under the Asia-Pacific Trade Agreement (APTA), which provides duty concessions on certain goods.
To meet the increasing demand for goods and services and promote the ‘Make in India’ initiative, the government has implemented various measures to boost domestic manufacturing and reduce dependence on imports. One such initiative is the productionlinked incentive (PLI) schemes in 14 critical sectors including electronics, pharmaceuticals, white goods, telecom and networking products, which are heavily dependent on imports.
These initiatives have reduced India’s dependence on imports, the government said, adding that the value of mobile handset imports decreased from ₹ 48,609 crore in FY15 to around ₹6,685 crore in FY23.
During FY24, the main drivers of merchandise export growth included electronic goods, drugs and pharmaceuticals, engineering goods, iron ore, cotton yarn/fabric, handloom products, and ceramic products and glassware.
For FY24 as a whole, India’s merchandise exports stood at $437.06 billion, down from $451.07 billion during the previous fiscal. Goods imports fell to $677.24 billion from $715.97 billion recorded during the same period.
$387 bn India’s trade deficit with China over the past five years
$437 bn India’s total merchandise exports in FY24