India’s Trade Deficit With China Soars Despite Rising Exports

 

India’s Trade Deficit With China Soars Despite Rising Exports

© AP Photo/ Andy Wong

 

An over 38% surge in India’s exports to China during the first half of the current fiscal has raised hope that China is addressing the country’s concerns on the trade front, but the surge in imports that add to burgeoning trade deficit tell a different side of the story.

New Delhi (Sputnik) – Compared to imports, India’s exports to China have grown faster at 38.5% between April and September this year. India exported items worth $5.4 billion to China compared to $3.9 billion between April-September last year. Imports from China, however, have added to India’s worries with the country receiving items worth $42.9 billion from its largest trading partner compared to last year’s $33.2 billion during the same period. This has further widened the trade imbalance in China’s favor by $37.5 billion, which stood at $29.3 billion last year during April-September period. The deficit has been primarily attributed to the massive shipments of electronics and pharmaceuticals from China.

The overall trade deficit with China narrowed marginally to $51.08 billion in 2016-17 from $52.69 billion in 2015-16, former commerce minister Nirmala Sitharaman had informed the Lok Sabha during the monsoon session. India’s bilateral trade with China stood at $71.48 billion in 2016-17.

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The rise in India’s exports has come largely from three sectors: iron ore, cotton yarn & ferroalloys, all raw material and inputs that feed into China’s manufacturing chain. In addition, the Indian government is looking at easier rules for export of agricultural products, including non-basmati rice, identified as an item of significant potential.

India Vs China : Trade Deficit

​India is reportedly planning to bridge the trade deficit by curbing imports and commerce minister Suresh Prabhu is taking measures to deal it sectorally, a Times of India report said. It further adds that while it may not be completely possible to choke the flow of imports, the approach could control the unabated flow at least. For instance, in August, the Ministry of Electronics and IT directed 21 smartphone makers, most of which are Chinese, to inform it about the procedures and processes they follow to ensure the security of mobile phones sold in India, following reports of data leakage and theft.

Experts in India, however, are not enthused and say it may not work and instead backfire.

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“Any increase in Indian exports is to be welcomed, but the agent for change is not New Delhi but Beijing. They decide what they want, and when, while we just deliver. Moreover, our exports are in dirty industries, which means, China grows but we get blamed for global pollution. That is the reality of Sino-Indian relations. The longstanding inability of New Delhi to dent China’s prowess, in any field, is a testimony to this,” Dr Deep K. Datta-Ray, Associate Professor, at the O.P. Jindal Global University told Sputnik. Ray is the author of “The making of Indian diplomacy”.

However, China is not the only country with which India’s trade deficit has increased in the last three years. Russia, Canada, Iran, South Africa, Japan and Australia too figure in the list. Many measures have been taken to overcome the overall trade deficit. These include implementation of Merchandise Exports from India Scheme, Services Exports from India Scheme, implementation of Niryat Bandhu Scheme, single window Interface for facilitating trade clearance project as part of ease of doing business, among others.

 

 

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