India-China trade deficit rises to $45 billion
The trade deficit between India and China has risen to $45 billion for 2015. The General Administration of Customs released data stating that Sino-Indian bilateral trade stood at $71.3 billion in 2015. Indian exports to China fell by 18% to $13.38 billion while imports stood at $58.25 billion. China has agreed to set up a high-level task force with India to improve trade figures.
What is trade balance?
The trade balance between two countries is calculated based on the difference between the monetary value of exports and imports. When the monetary value of a country's exports surpasses that of imports, the resulting condition is called a trade surplus. Similarly, when the monetary value of a country's imports exceeds that of exports, it is called a trade deficit.
India's exports to China
India's primary exports to China consist of raw materials including ores, slag and ash, iron and steel, plastics, organic chemicals, and cotton. Iron ore makes up the largest chunk of Indian exports to China. Experts also attribute the deficit in Sino-Indian bilateral trade to complicated customs procedures in China, and a lack of co-ordination between the Indian customs agencies and their counterparts in China
What are India's imports from China?
India imports finished goods from China. These items include electronic equipment, machines, engines, pumps, organic chemicals, fertilizers, iron and steel, plastics, iron or steel products, gems, precious metals, coins, ships, boats and medical and technical equipment. The value of these items are far higher than the value of the primary goods that India exports to China, resulting in annual trade deficits.
What caused in the dip in Indian exports?
Experts have attributed the current drop in Indian exports to the reduction in Iron ore mining in 2015. China's economic slowdown has also led to a reduction in demand for Iron ore. Economists also state that China's growth model is moving away from heavy industrial output to more sustainable avenues. Hence India will need to diversify its exports, to narrow the Sino-Indian trade deficit.
Trade figures between India and China
In 2011, India's exports to China stood at $18.1 billion against $55.3 billion in imports. (TD: $37.23 billion) In 2012, exports stood at $13.5 billion, against $52.25 billion in imports. (TD: $38.71 billion) In 2013, India's exports accounted for $14.82 billion, against $51 billion in imports. (TD: $36.21 billion) In 2014, exports stood at $11.95 billion against $60.3 billion in imports. (TD: $48.43 billion)
India cracking down on Iron ore mining
Courts in India have been imposing varying levels of embargo—either area-specific or by occasionally capping output—on iron ore mining and exports since 2010, aimed at curbing illegal mining and clandestine exports.
