Sino-Indian trade stays strong
Imports from China rose 46 percent in 2021 despite frosty bilateral relations
Despite the frosty relations between China and India, bilateral trade continues to rise as India’s demand for Chinese goods remains robust. China’s exports to India posted stronger-than-expected growth in 2021. India’s imports from China rose to $97.5 billion in the calendar year 2021, up 46.1 per cent from $66.7 billion in 2020, according to the latest data published by China’s General Administration of Customs or GACC.
India’s imports from China in 2021 were up 30.3 percent when compared to the 2019 level. Meanwhile, exports to China grew to a record high of $28.1 billion in 2021, up 34.9 percent from $20.9 billion in 2020. The country’s exports to China in 2021 were 56.5 percent higher than in 2019, according to Chinese government data.
India’s total trade with China in 2021 was worth $125.7 billion, according to the data.
The sharp rise in imports on a large base has pushed India’s trade deficit with China to a record high of $69.4 billion in 2021, up from $45.9 billion in 2020 and $56.8 billion in 2019, the GACC data shows.
Echoing this view, India’s federal junior minister of commerce and industry Anupriya Patel, in a written reply in the Indian Parliament last week, said “the exports to China have increased from $17.33 billion in Jan-Nov 2020 to $21.54 billion in JanNov 2021, exhibiting an increase of 24 percent.
“The imports have increased from $52.16 billion in Jan-Nov 2020 to $78.88 billion in Jan-Nov 2021.”
The major import items from China include telecom instruments, computer hardware and peripherals, fertilizers, electronic components/ instruments, project goods, organic chemicals, drug intermediates, consumer electronics, and electrical machinery, the minister said.
Some of India’s key imports from China include smartphones, components for smartphones and automobiles, telecom equipment, plastic and metallic goods, active pharmaceutical ingredients or APIs, and other chemicals and fertilizers such as urea, ammonia sulphate and other varieties, according to GACC.
In a separate reply, Commerce and Industry Minister Piyush Goyal said “the commodities exhibiting increase in exports include engineering goods, petroleum products, organic and inorganic chemicals, electronic goods, cotton yarn, marine products, minerals and ores, etc.”
The Indian government has made sustained efforts to achieve a more balanced trade with China, including bilateral engagements to address trade issues, Goyal added.
Indian importers continue to prefer imports from China citing cost effectiveness, easy availability and lower transport cost. Imports are cost effective due to large scale production in China, as production is highly mechanized, and also due to lower transportation cost, said Subhro Sengupta, a Kolkata-based importer from China.
Indian experts said a widening trade deficit, with India’s imports from China now nearly four times its exports in value terms, is a cause for concern.
According to data from the federal commerce ministry, China was India’s second largest trading partner in the April-November period, after the United States. The United Arab Emirates, Saudi Arabia and Iraq were the other top trading partners for India during the period.
India has to incentivize domestic companies to develop research and development and then build up domestic production to reduce the country’s dependence on imports, said economist Murali Kallummal, associate professor at the Centre for WTO Studies, Indian Institute of Foreign Trade.
It is hard for India to find substitutes for the products it imports from China, according to other experts.
Indian industry’s huge demand for electronic goods and machinery as well as APIs is one of the main reasons behind the surge in imports from China, said Ajai Sahai, director and CEO, Federation of Indian Export Organisations. .
Criticizing Prime Minister Narendra Modi, India’s main opposition Congress party and its leader Rahul Gandhi said on Feb 4 that imports from China are at an all-time high as the Modi government has “destroyed” the medium and small industries and unorganized sector that creates jobs.
“India will suffer more, if the country gradually distances itself from China and pursues free trade agreements with the US, Canada, the United Kingdom and European Union member countries,” said Amit K. Biswas, a professor of economics at Visva-Bharati University, in Santiniketan, West Bengal.