New Delhi: Despite the Modi government’s ‘Atmanirbhar Bharat’ push and attempts to reduce the nation’s dependence on goods manufactured in China, India’s trade deficit with the neighbouring country hit a record $77 billion from April 2021 to March 2022, according to data perused by ThePrint from China’s General Administration of Customs (GACC).
The GACC data showed that India’s exports to China stood at $26.46 billion while its imports from China stood at $103.47 for this period.
Electrical and electronic goods, machinery and fertilisers are the main drivers of India’s imports from China, according to the Federation of Indian Export Organisations (FIEO), the apex trade promotion body under India’s commerce ministry.
“Electrical and electronic goods, machinery and fertilisers are India’s big-ticket imports from China. Electrical and electronic goods and machinery account for roughly 50 per cent of our total imports from the country,” Ajay Sahai, DG and CEO of FIEO, told ThePrint.
Unlike the GACC, which has provided data for the month of March, the Indian commerce ministry has only furnished figures up to February this year. From the Indian side, the trade deficit so far stands at approximately $65.34 billion from April 2021 to February 2022.
This is still far higher than what was recorded in previous years – the trade deficit stood at $53.57 billion in 2018-19, $48.65 billion in 2019-20 and $44.02 billion in 2020-21, according to commerce ministry data.
In fact, the last time the trade deficit breached the $60 billion-mark was in 2017-2018 at $63 billion. Reports at the time attributed this to the significant decline in India’s exports of ores and cotton to China.
Though figures from 2018-19 to 2020-21 appear to show that the trade deficit has been on a downward trend, the latest figures from GACC suggest otherwise.
Bilateral trade almost $130 bn in FY22, shows Chinese data
Total bilateral trade between India and China from April 2021 to March 2022 stood at $129.93 billion, according to data calculated by ThePrint from the GACC. This was almost the same as the calendar-year figure released by the Chinese government four months ago.
ThePrint had previously reported that total India-China bilateral trade touched $125.66 billion and exports to India reached $97.52 billion from January 2021 to December 2021, going by GACC data.
India’s imports of electrical and electronic goods, particularly smartphones, as well as machinery, fertilisers and specialty chemicals, including active pharmaceutical ingredients (APIs), were driving the surge.
‘Chinese exports have strength in volumes’
Speaking to ThePrint, Biswajit Dhar, trade economist and professor, Centre for Economic Studies and Planning, School of Social Sciences, JNU, said there are three main reasons behind India’s widening trade deficit with China.
“First, unlike most major economies, China didn’t suffer the full economic impact of the pandemic and, in fact, recorded a positive growth rate in 2020. Second, every time there is a global economic downturn, China tries to depend less on the international market and tries to bolster domestic demand. It happened during the global financial crisis of 2008,” he said.
“Third, look at the kinds of commodities it imports versus exports. China imports a lot of iron ores and metals from India which are raw materials and intermediates. But they export a lot of finished or value-added products to us,” he added.
According to data from the Chinese customs website, China’s imports from India have grown considerably from pre-pandemic levels. From April 2021 to March 2022, imports from India stood at $26.46 billion – much higher than the $17.51 billion recorded between April 2019 and March 2020.
According to Dhar, this is a positive development but “still insufficient”. “Chinese exports have strength in volumes. That’s important for India because we have a large consumer base. For example, the extent to which India is getting APIs from China is mind-boggling. China supplies more than 90 per cent of APIs for India’s antibiotics and vitamins, and India does not really have an alternative source for meeting the scale of its API requirements,” he said.
(Edited by Nida Fatima Siddiqui)