India’s trade deficit with China likely to hit $150 billion in FY27 | Economy & Policy News

Strong exports to China, at $14 billion during the April-October period, have been driven by growth in marine products (15.84 times), organic chemicals (121 per cent), telecom instruments (96 per cent) and electric machinery and equipment (50 per cent). In contrast, India’s $97 billion imports were led by organic chemicals (52 per cent), electronics components (29 per cent) and telecom instruments (24 per cent).   

When it comes to individual commodities, India’s top five items exported to China are led by ‘populated, loaded or stuffed’ printed circuit boards, followed by light naphtha, full range naphtha; other telecom equipment parts and Vannamei shrimp. India’s top five imports were other telecom equipment parts, memories /memory chips/, lithium-ion, monolithic integrated circuits (digital) and personal computers (laptops, palmtops etc). 

India’s surge in electronic exports, especially smartphones, largely relies on China for components, leading to higher imports. India has been pressing China for a long time to facilitate more exports from India, highlighting the unsustainable trade deficit between the two countries. 

Union Finance Minister Nirmala Sitharaman last month said China’s non-tariff barriers were the biggest hurdle for Indian exports, alleging that Beijing had denied market access to Indian products despite significant demand potential for generic drugs, bovine meat and agricultural produce, contributing to a widening trade imbalance. 

“A decade has gone by consistently putting up a case for market access for Indian products, but non-tariff barriers have been very strong, and China uses non-tariff barriers unhesitatingly. Non-tariff barriers are the biggest hurdle in trade between India and China,” she said during a conversation hosted by the Atlantic Council on the sidelines of the International Monetary Fund-World Bank annual meetings in Bangkok. 

Sitharaman said New Delhi has repeatedly sought market access for products in which India had a competitive advantage, but progress has been limited despite scope for discussions on sanitary and phytosanitary measures and other regulatory issues. 

Responding to Sitharaman’s remarks, China’s foreign ministry said Beijing was ready to work with New Delhi to address “each other’s economic and trade concerns in a balanced way and promote the steady development of bilateral relations”. “China never aims for trade surplus,” Chinese foreign ministry spokesperson Mao Ning told the media in Beijing. 

Sitharaman said India has refrained from adopting punitive trade measures to address its trade imbalance with China, preferring negotiations despite the difficulties involved, unlike some other countries. “Probably that’s not the way India believes in dealing with trade negotiations. We sit and talk. It is sometimes very tiresome, but we do go through that approach rather than putting countervailing duties or some non-tariff barriers to counter their non-tariff barriers,” she added.