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India’s Trade Dependency On China

India’s Trade Dependency On China

UPSC CSE Mains Syllabus: GS-3- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

In news:

  • As border tensions between India and China flared up with the deadliest clash in more than four decades, leaving at least 20 Indian soldiers dead, there have been calls for boycotting goods imported from the neighbouring nation.
  • This will be difficult because the two economies are intertwined.

Import and exports:

  • India-China Trade China accounted for over 5%of India’s total exports in financial year 2019-20 and more than 14% of imports. 
  • Meaning, India runs a huge trade deficit with China, the biggest exporter to India.
  • While the absolute value of imports from our neighbour may have fallen, their share in the overall pie rose from 68% in the previous fiscal.
  • India, according to state-backed Invest.
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Chinese exports to India comprise smartphones, electrical appliances, power plant inputs, fertilisers, auto components, finished steel products, capital goods like power plants, telecom equipment, metro rail coaches, iron and steel products, pharmaceutical ingredients, chemicals and plastics and engineering goods, among other things, according to the Ministry of Commerce.

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India’s imports from China jumped 45 times since 2000 to reach over $70 billion in 2018-19, according to Invest India.

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FDI:

  • Chinese Investments In India Foreign direct investments from China come to metallurgical industries, renewable energy (solar panels), electrical equipment, automotive and chemicals.
  • Data compiled by BloombergQuint from China Global Investment Trackershowed Chinese FDI into India at $4.14 billion in 2019.
  • China’s commerce ministry, however, pegs the figure at at $8 billion for 2018-19.
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Bulk drugs:

  • India’s Dependence On China  for Bulk Drugs India’s pharmaceutical industryis the third largest in the world in by volume and ranks 14 by value.
  • The country exported medicines worth over $14 billion to the U.S. in 2018-19, according to a response to a query in the Rajya Sabha in March.
  • But, according to the same reply, India imports two-thirds of its active pharamaceutical ingredients, or key ingredients of drugs, from China.

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The Smartphone Dominance:

  • Chinese smartphones brands, led by Xiaomi, Vivo and Oppo, are market leaders in India with an estimated 72% share put together, leaving Samsung and Apple behind, according to a report by Gateway House.
  • Quarterly data by Counterpoint corroborates this.

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India should take proper measures to balance the trade with China.

Source:” Bloomberg Quint“.

POSSIBLE UPSC CSE MAINS QUESTION:

Give an account of the India and China trade relationship. Is it possible for India to reduce import dependence on China?