Why Is India Failing To Reduce Its China Dependence?

By: Yash Gupte

India-China trade is on track to surpass USD 100 billion for the second straight year. China's exports to India have gone up by 34.5 per cent.

India's trade with China continues to breach new records despite the Modi government’s ‘Atmanirbhar Bharat’ push and attempts to reduce the nation’s dependence on goods manufactured in China. As per trade data issued by the Ministry of Commerce, India’s imports from China reached a record $57.51 billion in the first half of the year. If this figure hold for next six months, the total imports will surpass last year’s $97.5 billion figure.

India-China trade is on track to surpass USD 100 billion for the second straight year. China's exports to India have gone up by 34.5 per cent. Although, Indian exports to China fell to USD 9.57 billion, a decline of 35.3 per cent. The trade deficit at the half-year mark stood at USD 47.94 billion.

Electrical and electronic goods account for roughly 50 per cent of our total imports from Beijing. Other main driver of imports include machinery, active pharmaceutical ingredients, auto components and fertilizers. India has also imported large quantities of medical supplies during the pandemic. India’s major exports to China include ores, slag and ash, cotton, organic chemicals, mineral fuels/oils, copper and its articles.

Source: Ministry of Commerce and Industry
*The data given for 2022-23 is from April-July 2022

Trade between the two neighbours had declined in 2020 on account of the pandemic but is now significantly up pre-pandemic levels. In 2021-22, India-China bilateral trade hit a record high of over USD 125 billion despite standoff by the militaries in Eastern Ladakh and boycott calls in domestic markets. China's exports to India last year went up by 46.2 per cent to USD 97.52 billion while India's exports to China grew by 34.2 per cent to USD 28.14 billion. The trade deficit stood at USD 69.38 billion in 2021.

India’s trade deficit with China has increased more than two-fold (219%) from $16 billion in 2007-08 to $51 billion in 2016-17. New Delhi managed to reduce the deficit by 48 percent in 2019-20. One of the primary reasons for such a huge deficit is due 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 characterized by primary and intermediate products.

The above figures are in sharp contrast to growing anger among Indians towards his eastern neighbour. Last week, C Voter-India Tracker had conducted a survey where a whopping 90 percent of the respondents said India should adopt a more aggressive stand towards China while a mere 10 percent said New Delhi should tone down its aggression with Beijing. Indians across age, gender, educational, income, religious and ethnic backgrounds backed India's aggressive stand against China.