India's reliance on Chinese industrial goods at all-time high
India's reliance on Chinese industrial goods, including telecom, machinery, and electronics, has significantly increased over the past 15 years. The Global Trade Research Initiative (GTRI) report reveals that China's contribution to India's imports of these goods has risen from 21% to 30%. This escalating trade deficit with China is raising concerns due to its potential impact on economic and national security dimensions.
Trade deficit with China over five years
Between 2019 and 2024, India's exports to China remained consistent at around $16 billion annually. However, imports from China saw a significant jump from $70.3 billion in 2018-19 to over $101 billion in 2023-24. This resulted in a cumulative trade deficit of more than $387 billion over five years, according to the GTRI report.
"Need to reevaluate import strategies"
Ajay Srivastava, the founder of GTRI, emphasized the need for the Indian government and industries to re-evaluate their import strategies. He suggested that diversifying and strengthening supply chains is essential for economic risk mitigation, bolstering domestic industries, and reducing dependence on single-country imports. This is especially true in the case of geopolitical competitors like China.
China's exports to India have grown 2.3 times faster
The GTRI report disclosed that China's exports to India have grown at a rate 2.3 times faster than India's total imports from all other countries. In the fiscal year 2023-24, India imported merchandise worth $677.2 billion in total, with $101.8 billion, or 15% of that coming from China. Of these imports from China, $100 billion or 98.5% were major industrial products, marking a substantial contribution to India's global imports of these goods which amounted to $337 billion.
Reliance increasing across various sectors
India's China reliance is notably increasing across various sectors, including electronics, telecom, and electrical; machinery, steel and base metal products, plastics, textiles and clothing. Automobiles; medical, paper, glass, leather, and others are also included. Most of the items could potentially be produced domestically.
Take a look at the statistical data
During April-January 2023-24, the electronics, telecom, and electrical sector had the highest import value at $67.8 billion, with China contributing $26.1 billion or 38.4% of total imports. In machinery sector, China accounts for $19 billion or 39.6% of India's imports. India imported chemical and pharmaceutical products totaling $54.1 billion, with China contributing $15.8 billion, accounting for 29.2%. Likewise, out of the $18.5 billion worth of imports of plastics and other materials, China supplied goods valued at $4.8 billion, comprising 25.8%.
