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India’s imports from China rise despite boycott calls, pandemic. But this may not last

There has been a surge in China’s share in India’s trade basket by almost 3 percentage points for imports and 2 percentage points for exports.

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New Delhi: China’s share in India’s export and import basket has surged over a year after calls emerged for boycott of Chinese goods in the aftermath of the India-China standoff and the subsequent push by the Narendra Modi government for ‘Atmanirbharta’ (self-sufficiency) push, trade data shows.

But this surge may be short-lived, experts say, pointing to the impending opening up of factories around the world.

Exports and imports between India and China grew at over 65 per cent in the January-June period, trade data sourced from official agencies in both countries shows.

The surge came despite calls to boycott Chinese goods made after the 15 June Galwan clash at the Line of Actual Control in eastern Ladakh. Since then, the Modi government has also been trying to encourage local production and discourage imports through higher import duties.

China remains India’s largest import market and the second-largest export market after the US.

Its share in India’s total exports rose two percentage points to 7.3 per cent in 2020-21 from 5.3 per cent in 2019-20, shows data from the Indian commerce ministry, and the Chinese government’s trade data dissemination body.

Similarly, China’s share in India’s total imports has also surged, increasing by 3 percentage points and crossing 16 per cent in 2020-21 after seeing a dip in the previous two years. Its share was at 16.6 per cent in 2020-21, as against 13.7 per cent in both 2019-20 and 2018-19.

Trade data for the current fiscal shows that this trend is continuing as India battles the second wave of the pandemic.

Graphic y Ramandeep Kaur | ThePrint
Graphic by Ramandeep Kaur | ThePrint

Also read: Consumer confidence returning, RBI in ‘whatever it takes’ mode to ensure recovery, says Das

What experts say

The import surge from China will come down in the coming months as factories open up around the world, trade experts pointed out.

“Last year, most of the economies were under lockdown and China was functioning. Manufacturing units in Europe and North America were shut while Chinese factories were operating. Even as overall imports compressed, imports from China remained resilient,” said Ajai Sahai, Director General and CEO of Federation of Indian Export Organisations.

“But this is a short-term phenomenon. When economies start opening up, the shares of countries will change,” Sahai said. 

“The real growth story is India’s exports to China. China has granted market access to certain Indian goods and this has led to a rise in exports of agricultural commodities and marine exports to China. Some recent issues of marine packaging have surfaced but overall these exports should sustain going ahead,” he added.

India’s top exports to China in 2021 include iron ore, petroleum products, organic chemicals, spices, marine products, iron and steel, aluminium products, and rice.

However, exports of some commodities like iron ore have started contracting from the highs seen last year driven by a sharp fall in demand from China.

In a 29 July note, India Ratings and Research pointed out that India’s export markets are opening up and this is good news for Indian exports.

“A glance at the FY21 data suggests that some of the major export destinations for India’s top 10 major commodities are also the regions which are expected to witness strong import growth in 2021,” the note said.

Among India’s top imports from China include electronic components, telecom instruments, computer hardware and industrial machinery. 

A group of ministers in a report last year had acknowledged that India remains critically dependent on China for 86 items including items like consumer electronics, computer hardware, telephone equipment and electronic items.

Graphic by Ramandeep Kaur | ThePrint
Graphic by Ramandeep Kaur | ThePrint

Also read: Modi govt finally moves to bury controversial UPA era retrospective tax ghost


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