India (Common Wealth) _ The government told parliament on Wednesday that India’s imports from China increased in fiscal 2023 across at least 25 main commodity groupings, including consumer electronics, auto components, and iron and steel items.
The declaration, which detailed Chinese imports in 31 commodity groups, comes as New Delhi has been working hard to lower its trade deficit with China since border tensions escalated in 2020.
According to the statement, imports of electronic equipment from China increased 14% year on year in fiscal 2023, while imports of organic chemicals and iron and steel goods increased 9% and 12.3%, respectively. In fiscal 2021, imports of all listed commodity groupings exceeded shipments. India demanded a license for the import of laptops, tablets, and personal computers last week in order to stimulate indigenous manufacturing and limit imports from China.
The mandate, which takes effect in November 2023, is part of a series of recent steps aimed against Chinese products and investment. India’s trade deficit with China increased 13.5% year on year in fiscal 2023, as India’s robust domestic demand continued to support Chinese imports while COVID lockdowns in China hampered imports from India.
Many various countries tend to source from China for high-quality products at low prices. Since the post-pandemic year, China has been the top importer of goods from India. According to Money Control, exports from China to India reached $98.5 billion at the end of the first quarter of 2023, accounting for a 4.16 percent increase in Chinese imports.
According to the United Nations COMTRADE database on international trade in 2022, India imported $89.66 billion in products from China in the first nine months of the year, the biggest three-quarter total on record. Simultaneously, India’s average applied import tariff increased to 18.3% from 15% the previous year.
Looking at India’s other major trading partners, the United States of America came in second with $77.02 billion in goods in 2021, followed by the United Arab Emirates third, with $43.07 billion in products. India has traditionally imported more from China than it has exported. India’s overall trade balance was -8.37 billion USD in April 2022.However, their overall trade balance fell to -1.38 billion USD in April 2023, and both figures are still considered trade deficits.
The reason for India’s exceptionally high and ever-expanding import-export trade deficit is that the country imports commodities to bridge the gap between domestic production and supply, as well as customer and demand preferences for diverse products.
Despite a minor decrease in imports in 2023, the increase in the trade imbalance can be ascribed to two factors: A limited commodity basket. Most Indian agricultural products and competitive markets, such as medicines, IT/ITES, and so on, face market entry barriers. Chinese exports have overtaken India’s raw material-based commodities.
Consumer electronics, computer hardware, electrical parts, mechanical and electrical machinery, organic chemicals, power-related equipment, telecom, intermediate goods, plastics, and fertilizers are among the major Chinese imports into India. Vehicles (except railway or tramway) are also in the the top eight Chinese products imported into India.
Iron ore, mineral fuels, organic chemicals, cotton, copper, diamonds, natural gems, and other raw-material-based commodities are among India’s top exports to China. Many industries in India, particularly the medical sector, rely heavily on Chinese products.
For example, China imports almost 68% of India’s $42 billion pharmaceutical industry’s active pharmaceutical ingredients (APIs). Medical supply imports have also increased in recent years.
According to Indian sources, total trade between the two Asian behemoths reached a record $135.98 billion last year, an increase of 8.4% from 2021 levels. Last year, India imported $101.02 billion more from China than it exported to China, resulting in a trade deficit.
