News Highlight
Since India-China trade started picking up, the growth in India’s exports to China has been much higher than the import growth.
Key Takeaway
- China is one of India’s large trading partners, with trade flows between the two countries having grown 59% from about $72 billion in 2014-15 (FY15), to $115.4 billion in FY22, said by a Commerce Ministry official.
- Intermediate goods account for more than a third of India’s imports from China, while capital goods constitute another 19.3%, with telecom and power sector gear being key drivers.
- The production-linked incentive schemes(PLI) for different sectors will help reduce the dependence on such imports over time, even as technical regulations framed for products such as toys, electronics, chemicals and fertilisers will check substandard imports
India-China Economic and Commercial relations.
- Trade:
- The trade and economic relationship between India and China has seen rapid growth in the last few years.
- During 2021, the overall trade with China saw an increase of 43.2% over the same period last year.
- India’s top exports to China included diamonds, cotton yarn, iron ore, copper and organic chemicals.
- Foreign direct investment (FDI):
- Between April 2000 and September 2020, India received US$2.43 billion in FDI from China.
- Chinese FDI in India (Cumulative) $26 Billion.
- Chinese FDI is important for Indian startups and companies, especially during the early stages.
- Bilateral Economic Presence:
- Chinese Companies in India: More than 100.
- Indian companies in China: more than 50.
- Indian diasporas:
- Historically, Indians played a significant role in disseminating Buddhism in China.
- In modern times, there is a large, long-standing community of Indians living in Hong Kong, often for descendants with several generations of roots and a growing population of students, traders and employees in Mainland China.
- Multilateral economic forums:
- India and China are members of
- Asian Infrastructure and Investment Bank
- Shanghai Cooperation Organisation
- BRICS
- G20
- India and China are members of
- Bilateral Economic and Commercial Dialogue Mechanisms:
- High-Level Mechanism on Trade and Economic Cooperation at Wuhan.
- Joint Group on Economic Relations, Science and Technology.
- Strategic Economic Dialogue (SED) (2010).
- NITI Aayog – Development Research Centre of China (DRC) Dialogue (2015).
- India-China Financial Dialogue (2019).
- Cooperation in Railway Sector- MoU on cooperation in the railway sector was signed in September 2014.
India-China Economic and Commercial issues
- Dumping:
- Cheap Chinese products are flooding Indian markets and damaging the viability of domestic products.
- Trade deficit:
- India has a high trade deficit with China which undermines our economic sovereignty with China.
- Tax evasion:
- The Indian government has issued notices to three Chinese mobile companies for tax evasion.
- Ban on Chinese Apps:
- Recently, the Ministry of Home Affairs has recommended a ban on 54 Chinese mobile applications, including the popular game Garena Free Fire over privacy and national security concerns.
- Contesting in Africa:
- China is taking over mines and natural resources in Africa and other parts.
- High Import Dependence:
- Excessive imports have made India dependent on the Chinese for critical electrical machinery and pharma ingredients.
- Pharmaceuticals:
- 70% of Active Pharmaceutical Ingredients (API) is imported from China; thus Indian drug industry also depends heavily on China.
Content Source: The Hindu