Mint Primer: How China beat the US to No.1 in trade with India
Mint looks at how trade between the two Asian giants has evolved and why it is proving to be so difficult for India to decouple itself from its neighbour. In FY24, bilateral trade grew 4% to $118.4 billion from $113.8 billion in FY23. India-US trade in the same period declined by 8.6% to $118.3 billion.
Trade between the Asian giants has grown robustly in the past five years from around $80 billion. India-China and India-US trade ties are also a story of contrasts. While India enjoys a hefty $36.7 billion trade surplus with the US—it exports more than it imports—the reverse is true for China, where it suffers from a debilitating deficit.
This shows that campaigns such as boycott of made-in-China goods or firms of Chinese origin have had negligible impact on trade. Last fiscal, the deficit touched a record $85 billion having doubled in the past four years (see table). During the year, imports from China grew 3.3% to cross $100 billion even as India’s overall imports declined 5.6% at $675 billion. This undermined an 8.8% growth in exports to China during the year at $16.7 billion, which came off a low base courtesy a 28% decline in FY23.
China now accounts for 10.6% of India’s global trade and 15% of its import bill. The high trade deficit has been a subject of friction between the two countries amid allegations of dumping of goods by China from different sectors in India. Machines and electric appliances made up over half of all Chinese imports in FY24.
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