News Highlight
The favourable India-China trade has enjoyed with India since bilateral commerce began to boom in the early 2000s.
Key Takeaway
- The trade gap has notably widened in the past decade.
- In 2021, annual two-way trade crossed $100 billion for the first time, reaching $125.6 billion, with India’s imports accounting for $97.5 billion, pegging the imbalance to nearly $70 billion.
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:
- 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 Ingredient (API) is imported from China; thus Indian drug industry also depends heavily on China.
Content Source: The Hindu