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Fall In India’s Trade Deficit With China – Free PDF Download

What Is a Trade Deficit?

  • A trade deficit occurs when a country’s imports exceed its exports during a given time period.
  • It is also referred to as a negative balance of trade (BOT).
  • The trade deficit between the countries was at $ 53.56 billion in 2018-19 and $ 63 billion in 2017-18.
  • India’s trade deficit with China fell to $ 48.66 billion in 2019-20.
  • This contraction is due to decline in imports and not increase in exports.
  • Exports to China in the last financial year stood at $ 16.6 billion, while imports aggregated at $ 65.26 billion.

India China Trade

  • Since China joined the WTO in December 2001, India-China trade has grown from $1.49 billion to $84.4 billion in 2017.
  • Today, China is India’s one of the largest trading partner and accounts for about 14% of India’s imports.
  • While we are China’s 11th largest trading partner.

What are the main imports from China?

  • The main imports from China include-
  • Clocks and watches, musical instruments, toys, sports goods, furniture, mattresses, plastics, electrical machinery, electronic equipment, chemicals, iron and steel items, fertilisers, mineral fuel and metals.
  • Exports to China?
  • Most of India’s exports to China are goods and raw materials.
  • The main exports to China are petroleum products, cotton, organic chemicals, iron ore and plastic raw materials.

What government is doing to reduce this deficit?

  • New Delhi has time and again raised concerns over widening trade deficit with China.
  • The government is taking steps such as framing technical regulations and quality norms for several products to cut dependence on China for imports.
  • As many as 371 products have been identified for technical regulations.
  • Out of these, technical regulations have been formulated for 150 products worth about $ 47 billion of imports.
  • Over 50 quality control orders (QCOs) and other technical regulations have been notified in the past one year including on electronic goods, toys, air conditioners, bicycle parts, chemicals, safety glass, pressure cooker, items of steel, electrical items such as cables.
  • India has also imposed anti-dumping duties on several goods which are being dumped in the domestic market
  • At below the average prices from China with a view to guard domestic players fromcheap imports.

What about FDI from China?

  • Similarly, foreign direct investment (FDI) from China into India too has dipped to $ 163.78 million in 2019-20 from $ 229 million in the previous fiscal.
  • India had received $ 350.22 million FDI from the neighbouring country in 2017-18 and $ 277.25 million in 2016-17.
  • During April 2000 and March 2020,
  • New Delhi attracted FDI worth $ 2.38 billion from China.



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