A reduction seen in India’s trade deficit with China in financial year 2020

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According to government data, India’s trade deficit with China fell to USD 48.66 billion in 2019-20 due to declines in imports from the neighboring country. Exports to China stood at USD 16.6 billion in the last financial year, while imports were aggregated at USD 65.26 billion, the data showed. The trade deficit between India and China stood at USD 53.56 billion in 2018-19 and USD 63 billion in 2017-18. Watches, clocks, toys, sports equipment, musical instruments, plastic products, mattresses, electronic equipment (phone, charger, speaker, torch, etc.), electrical machinery, fertilizers, metals, iron and steel items, and mineral fuel.

It was seen time and again that the trade deficit India has over China had been widening with China increasing its exports to India while there was no improvement in India’s exports to China. But it was seen that many of the products that China exported to India had some technical issues or was of low quality, because of which many of the products would not have much of a lifetime and would get damaged in a very short period. Some software’s provided by China tech companies also had security issues. This is why the Indian government is taking measures such as forming technical regulations and quality norms, and the products and services sold by Chinese companies that do not qualify these norms will be rejected by the Indian government. Therefore this measure will help in cutting the dependence of India on China for imports.

Usually, Chinese companies sell many products in India at a price below the average market prices of China which has brought up huge competition for the domestic market. The government of India, therefore, imposed anti-dumping duties on such products to safeguard domestic players from cheap imports. The government has already identified 371 products for technical regulations, out of this for 150 products worth about USD 47 billion of imports technical regulations have been formed. Over 50 quality control orders and technical regulations have been established in the past year.

About 14 percent of India’s imports are from China. Foreign Direct Investments (FDI) from China have gone down to USD 163.78 million in 2019-20 from USD 229 million in the previous financial year. The government implemented FDI norms that a company or an individual from a country that shares land borders with India can invest in any sector only after getting government approval from India.

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