Two-way trade between the longstanding economic and strategic rivals stood at $77.7 billion last year, according to provisional data from India’s commerce ministry. Although that was lower than the previous year’s $85.5 billion total, it was enough to make China the largest commercial partner displacing the U.S. -- bilateral trade with whom came in at $75.9 billion amid muted demand for goods in the middle of a pandemic.
While Prime Minister Narendra Modi banned hundreds of Chinese apps, slowed approvals for investments from the neighbor and called for self-reliance after a deadly clash along their disputed Himalayan border, India continues to rely heavily on Chinese-made heavy machinery, telecom equipment and home appliances. As a result, the bilateral trade gap with China was at almost $40 billion in 2020, making it India’s largest.
Total imports from China at $58.7 billion were more than India’s combined purchases from the U.S. and the U.A.E, which are its second- and third-largest trade partners, respectively. Heavy machinery imports accounted for 51% of India’s purchases from its neighbor.
That said, India did manage to lower imports from its Asian neighbor amid demand disruptions caused by the coronavirus pandemic. The South Asian nation also managed to increase its exports to China by about 11% from a year ago to $19 billion last year, which makes any further worsening of ties with Beijing a threat to New Delhi’s export revenue.
“Still a very long way to go” is how Amitendu Palit, an economist specializing in international trade and investment at the National University of Singapore, described New Delhi’s efforts to wean itself away from Beijing. “The PLI schemes will take at least four-five years to create fresh capacities in specific sectors. Till then reliance on China would continue.”
Download The Economic Times News App to get Daily Market Updates & Live Business News.
2 Comments on this Story
Phuksuk Wand3 days ago
Dependencies cannot be removed so easily so soon but at least Govt is taking steps in the right direction.
Joji Cherian3 days ago
Now Modi will have to go after some new catchphrase. doubling farmers income, 5 trillion economy and latest atmanirbhan. all gone awry and should be forgotten.After all he hast fool people and sustain himself