According to the latest data from the Commerce Ministry, India’s exports to China rose by 8.74% to $16.67 billion in FY24 from $15.33 billion in FY23. Despite this increase, the figures remain lower than the pre-pandemic levels. Imports from China also saw a rise, increasing by 3.29% to $101.75 billion in FY24 from $98.51 billion in FY23. Ajay Srivastava, Founder of the Global Trade Research Initiative (GTRI), noted that while there has been a growth in trade, India’s exports to China primarily consist of raw materials and minerals and have not yet reached the levels seen in FY19. Srivastava highlighted the growing trade deficit with China, which has accumulated to over $387 billion over the past five years.
He expressed concerns about India’s increasing reliance on imports from China, particularly for materials used in solar energy, electronics, and electric vehicles sectors. For the fiscal year FY24, India’s total merchandise exports declined to $437.06 billion from $451.07 billion in the previous year. Similarly, merchandise imports decreased to $677.24 billion from $715.97 billion in FY23. The sectors driving export growth included electronic goods, pharmaceuticals, engineering goods, and various other commodities. China’s economic struggles, including issues in the property sector, rising debt, and weak consumer spending, have also affected its trade figures. In 2023, China’s merchandise exports fell by 4.6%, marking the first decline since 2016, with imports also decreasing by 5.5%. Despite these challenges, certain Indian export items to China, such as iron ore and cotton yarn, showed significant growth in FY24.
India’s merchandise trade deficit showed a decrease in March, dropping to $15.6 billion, the lowest in 11 months. This comes as India is shifting its trade strategy, engaging in negotiations for free-trade agreements with nations including the US, UK, Australia, and others, excluding China, with which trade continues under the Asia-Pacific Trade Agreement. The Indian government is also promoting domestic manufacturing through various initiatives, including the production-linked incentive schemes in sectors heavily reliant on imports, aiming to decrease dependency and boost the ‘Make in India’ initiative. As a result, imports of certain goods like mobile handsets have significantly reduced, illustrating progress in these efforts.
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