Amid bilateral cold, Indo-Chinese commercial brands saw record increase in 2021

DESPITE INDIA’s efforts to reduce its dependence on imports from China amid an increased emphasis on self-sufficiency and escalating tensions along the border, bilateral trade increased by 43.3% in 2021 – a year that marked a record high for exports to and imports from China, according to Chinese government data.

India’s imports from China reached $97.5 billion in calendar year 2021, up 46.1% from $66.7 billion in 2020, which was impacted by the restrictions of Covid, according to data from the General Administration of Customs of China. Imports in 2021 increased by 30.3% compared to 2019.

India’s exports to China also hit a record high of $28.1 billion in 2021, up 34.9% from $20.9 billion in 2020. Exports to China in 2021 were 56.5% higher than those of 2019.

According to the data, India’s total trade with China in 2021 was worth $125.7 billion.

The surge in broad-based imports pushed India’s trade deficit with China to a record $69.4 billion in 2021 from $45.9 billion in 2020 and $56.8 billion. dollars in 2019.

The record trade figures between India and China in 2021 come even as the armies of the two countries have been unable to resolve the protracted border dispute despite 14 rounds of border talks.

The worsening trade deficit, with India’s imports from China now accounting for nearly four times its exports in value, is also of concern, alongside the fact that India’s export basket consists mainly of primary products, while imports from from China are dominated by value-added items.

According to data from the Union Ministry of Commerce, China was India’s second largest trading partner during the April-November period, after the United States. The United Arab Emirates, Saudi Arabia, Iraq and Hong Kong were India’s other major trading partners during the period. India’s official statistics on bilateral trade with China are only updated to November 2021.


Look at the trade deficit

The record trade between India and China comes amid a border standoff. Delhi also has an eye on the growing trade deficit: in terms of value, India’s imports from China are almost four times its exports to the country.

Some of India’s major imports from China include smartphones, smartphone and automotive components, telecommunications equipment, plastic and metal products, active pharmaceutical ingredients (APIs) and other chemicals.

The surge in imports came despite moves by the Center to raise tariffs on key imports from China, including components for electronics such as smartphones. The government has in the past two fiscal years increased import duties on circuit board assemblies, mobile charger components, display assemblies and other components used in smartphone assembly in India.

Experts pointed out that players in the Indian electronics space were still largely focused on product assembly and did not have much discretion in component sourcing.

Commerce Ministry officials had said earlier this fiscal year that India’s trade growth with other key trading partners, including the United States, United Arab Emirates and Australia, was even higher than that with China. India is currently in the process of negotiating Free Trade Agreements (FTAs) with the UAE, EU, UK and Australia.

Commodity exports were a major part of India’s foreign trade with China, with iron ore, organic chemicals and cotton being among the major export items. Other major exports to China included iron and steel, marine products and engineering products.

The increase in trade comes despite government moves to reduce India’s dependence on Chinese imports after clashes between troops from the two countries along the Ladakh border.

In June 2020, 20 Indian soldiers and several Chinese soldiers were killed in a violent border clash in Ladakh’s Galwan Valley. Shortly after, the Union Department of Energy imposed a de facto ban on the import of electrical equipment from China, citing cybersecurity concerns. The government has also asked state-owned telecom companies BSNL and MTNL to exclude Chinese telecom equipment companies including Huawei and ZTE from its network upgrade process.

The Center then blocked the social media app TikTok and 58 other Chinese apps in India, calling them “prejudicial” to India’s sovereignty, integrity and national security. Other banned apps include We Chat, Alibaba’s UC browser, Club Factory, and PUBG mobile. The blocks were converted to permanent bans by the Department of Electronics and Information Technology (MeitY) in 2021.

The government has also changed the rules on foreign direct investment (FDI), making its approval essential for any FDI into Indian companies from neighboring countries – apparently aimed at preventing opportunistic takeovers of domestic companies by Chinese companies. during the pandemic.

India has also tightened its surveillance on the dumping of goods from China in the domestic market. In December 2021, India imposed anti-dumping duties on five Chinese products, including some aluminum products and chemicals, for five years to protect local manufacturers.

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