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India's trade deficit with China up two-fold in a decade; can New Delhi benefit from Beijing's 'trade war' with Washington?

  Mumbai: India's trade deficit with China increased more than two-fold (219 percent) from $16 billion in 2007-08 to $51 billion in 2016-17, according to commerce ministry data. India's imports ($61 billion) from China were six times its exports ($10 billion) in 2016-17, making rising trade imbalance a major concern.

“Increasing trade deficit with China can be attributed primarily to the fact that Chinese exports to India rely strongly on manufactured items to meet the demand of fast expanding sectors like telecom and power, while India’s exports to China are characterised by primary and intermediate products,” CR Chaudhary, minister of state in the commerce ministry, said in a reply to the Lok Sabha (Parliament’s Lower House) on 18 December, 2017.
India China. Representational image. AFP


The recent trade war between the United States of America and China has sparked a ray of hope for Indian exports such as cotton, soya bean and maize to Asian markets, especially to China. As China imposes tariff barriers to US products, Indian exports are expected to increase.

For instance, cotton has been one of India’s leading exports to China, but volumes have shrunk considerably in the past few years. Now, China has imposed a 25 percent tax on US imports of cotton, and shipments from India are expected to see a boost this year.

Largest trading partner

China is India’s largest trading partner with bilateral trade reaching almost $72 billion in 2016-17, an increase of 88 percent from $38 billion in 2007-08.

Bilateral trade between April 2017 and January 2018 was reported to be more than $73 billion, the most over the last decade.

India’s imports from China have more than doubled (125 percent) over the last decade, from $27 billion in 2007-08 to $61 billion in 2016-17. Imports crossed $63 billion in January 2018, the most in the last 10 years.

India’s exports to China have declined by six percent from $10.9 billion in 2007-08 to 10.2 percent in 2016-17. India reported exports worth $18 billion in 2011-12, the most in the last 10 years, which fell 43 percent to 2016-17.

India’s major exports to China include ores, slag and ash, cotton, organic chemicals, mineral fuels/oils, copper and its articles. Imports include telecom instruments, electronic components and instruments, computer hardware, organic chemicals, plastics and plastic items.
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