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India takes steps to iron out its trade deficit with China

TFI Desk by TFI Desk
9 April 2019
in Trending
India, china trade

(PC: HT)

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With rise in protectionist economic policies around the world, China which derives most of its economic might from exports has been in the hot spot. China is the largest trading partner of India and has been under pressure from the Indian government to ease out the trade imbalance between the two neighboring nations. The total trade between India and China stood at a whopping $89.71 billion in 2017-18(April-march). The total imports from China accounted for $76.38 billion while the exports accounted for $13.33 billion. However new data has suggested that India is improving its position in the trade imbalance between the two Asian giants. 

India’s imports from China stood at $60 billion during the April-January period of the 2018-19 financial years, a decline of a significant 5% over the year-ago period, according to the PHD Chamber of Commerce. According to the chamber the trade deficit also eased to $46 billion in April-January 2019 from $53 billion a year ago. The data provided by the Commerce Ministry showed that India’s total export to China totaled $13.8 billion whereas its India’s import from China stood at $60 Billion during the April-January period.

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India over the last few years has experienced positive results regarding its exports to China which saw a major 31% rise in April-January, 2019, increased from $10 billion in April-January 2018 to $14 billion in April-January 2019, PHD Chamber of Commerce and Industry Secretary General Mahesh Reddy said.

“Despite substantial volume of imports from China, of lately, India’s import growth from China shrunk from 24 percent during April to January 2018 to (-) 5 percent during April-January 2019,” said the PHD Chamber of Commerce and Industry Secretary General Mahesh Reddy.

Despite the huge trade deficit that still exists, it is poised to ease out in coming years. Given the change in economic policies in India which have been trying to bridge this huge trade gap. China has been under pressure from around the world to adopt friendly policies for foreign imports to ease out the asymmetric trade balances.

In a statement at the WTO India had cautioned China that the huge trade gap needed to be bridged with positive actions. In its statement during China’s trade policy review, India had pointed out that China needed to make efforts to ease Indian exports to the nation. Rice, meat, pharmaceuticals and IT products from India were the main subjects.

Over the past decades China has been expanding its footprint in India. However with new policies in place and firm resolve by the Government have been successful in soothing out the huge trade imbalance with China, which is a matter of concern not only for India but other nations around the world also.

The Indian pharmaceutical sector can find a huge opportunity in China, with the expansion of the Chinese health program. Prime Minister Narendra Modi’s synergy with President Xi will surely aid this huge advance in the India-China trade which will further ease out the mammoth trade imbalance between the two Asian giants.

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