New Delhi: In the span of the last 15 years, India has seen a significant shift in its import patterns, with a marked increase in the reliance on Chinese industrial goods. The share of such imports from China has escalated from 21% to 30%, as reported by the Global Trade Research Initiative (GTRI).
Trade Deficit Concerns:
The report highlights a worrying trend in the trade dynamics between India and China. From 2019 to 2024, India’s exports to China have remained stagnant at approximately $16 billion annually. In contrast, imports from China have witnessed a dramatic rise from $70.3 billion in 2018-19 to over $101 billion in 2023-24. This surge has contributed to a staggering cumulative trade deficit of over $387 billion over the past five years.
Strategic Implications:
The growing trade deficit with China is not just an economic issue but also carries profound strategic implications. The dependency on Chinese imports intertwines with national security concerns, necessitating a critical evaluation of India’s import strategies.
Government and Industry Response:
Ajay Srivastava, the founder of GTRI, urges the Indian government and industries to reassess and potentially recalibrate their import strategies. The aim is to cultivate diversified and resilient supply chains, which is crucial for mitigating economic risks, strengthening domestic industries, and reducing reliance on imports from a geopolitical rival.
Import Growth Comparison:
The report sheds light on the disproportionate growth of imports from China compared to India’s overall import growth. China’s exports to India have grown 2.3 times faster than India’s total imports from all other countries.
Merchandise Imports in 2023-24:
India’s total merchandise imports in 2023-24 amounted to $677.2 billion, with a significant $101.8 billion originating from China. This accounts for 15% of India’s total imports, with a whopping 98.5% of these imports falling under major industrial product categories.
Sector-Specific Dependence:
The dependence on Chinese imports is notably high in key sectors such as electronics, telecom, electrical products, machinery, chemicals, pharmaceuticals, iron, steel, base metals, plastics, textiles, clothing, automobiles, and other categories.
Electronics, Telecom, and Electrical Products:
For the period of April-January 2023-24, the electronics, telecom, and electrical sectors recorded the highest import value at $67.8 billion. China’s contribution to this was $26.1 billion, representing 38.4% of the total imports in this category.
Machinery Sector:
In the machinery sector, China’s share stands at $19 billion, which is 39.6% of India’s imports in this sector, underscoring China’s pivotal role as a machinery supplier to India.
Chemical and Pharmaceutical Imports:
India’s chemical and pharmaceutical imports during the same period were valued at $54.1 billion, with $15.8 billion coming from China, marking a 29.2% share.
Plastics and Related Articles:
The total imports for plastics and related articles stood at $18.5 billion, with China providing goods worth $4.8 billion, accounting for 25.8% of the total imports in this sector.
Capital Goods and Machinery:
Srivastava points out that half of the imports from China consist of capital goods and machinery, highlighting the critical need for focused research and development in these areas.
Intermediate Goods:
Intermediate goods such as organic chemicals, APIs, and plastics, which represent 37% of imports, indicate an urgent need for industry upgrades.
Consumer Goods:
Consumer goods comprise 12% of the imports from China, reflecting the diverse nature of the imported goods.
