India’s trade deficit with China: After the US imposed high tariffs on India, the government adopted the strategy of finding alternative markets for exporters and in the same sequence, efforts were made to strengthen trade relations with other countries including China, even leaving behind old disputes like Doklam, indications were given to increase economic cooperation and the Indian market was also relatively opened for Chinese products, but now the latest figures that have come out have increased the concerns of the government.
According to the report of Global Trade Research Initiative (GTRI), India’s trade deficit with China is continuously increasing and it is expected to reach US $ 106 billion in 2025, which will be a very worrying level till now.
The report gave sleepless nights
The report states that India’s exports to China were $ 23 billion in 2021, which will decline to $ 15.2 billion in 2022, $ 14.5 billion in 2023 and increase marginally to $ 15.1 billion in 2024, while it is expected to reach $ 17.5 billion in 2025. In contrast, India’s imports from China have increased rapidly and are expected to reach $123.5 billion in 2025, due to which the trade deficit may increase from $64.7 billion in 2021 to $94.5 billion in 2024 and then to $106 billion in 2025.
According to GTRI founder Ajay Srivastava, about 80 percent of India’s imports from China are concentrated in only four major categories – electronics, machinery, organic chemicals and plastics, which also highlights India’s industrial dependence. On behalf of the government, Minister of State for Commerce and Industry Jitin Prasad told Parliament that this trade deficit is mainly due to import of raw materials, intermediate and capital goods, such as auto components, electronic and mobile phone parts, machinery and active pharmaceutical ingredients, which are used in making finished products in India and then exported.
Trade deficit with China may increase
Considering the seriousness of the situation, the government has also talked about constituting an inter-ministerial committee to review the import-export trends and suggest necessary corrective steps. Interestingly, India’s exports to China have increased rapidly in recent months. In November it jumped 90 percent to $2.2 billion and between April and November total exports registered an increase of 33 percent. But despite this, this increase in imports is proving to be inadequate, due to which India’s increasing trade deficit with China is becoming a major economic and strategic challenge for the government.
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