India-China Trade Relations: China Resumes Position as Top Trading Partner

India’s trade landscape witnessed a significant shift in the fiscal year 2023-24 (FY24) as China reclaimed its status as India’s leading trading partner, a position it held prior to a two-year hiatus, according to data released by the Global Trade Research Initiative (GTRI).

During FY24, India’s imports from China surged past the $100 billion mark, reaching a total bilateral trade value of $118.4 billion. This uptick represents a notable increase compared to the previous fiscal year. Imports from China saw a 3.24% rise, totaling $101.7 billion, while exports to China concurrently increased by 8.7%, amounting to $16.67 billion.

Analyzing trends over the past five fiscal years (FY19-FY24), India’s exports to China experienced a slight decline of 0.6%, contrasting sharply with the robust 44.7% surge in imports from China. These figures underscore China’s significance as a key trading partner for India and highlight the evolving dynamics of their economic relationship.

Conversely, bilateral trade between India and the United States in FY24 stood at $118.3 billion, positioning the US as India’s second-largest trading partner. However, despite the overall trade volume, exports to the US decreased marginally by 1.32%, totaling $77.5 billion, while imports also witnessed a downturn of 20%, amounting to $40.8 billion.

Despite the recent dip in exports to the US, the long-term trajectory of bilateral trade between India and the US remains positive. Over the past five years, exports to the US surged by 47.9%, while imports experienced a commendable growth of 14.7%. This growth contributed to a widening trade surplus for India, a trend highlighted in the GTRI report.

The resurgence of China as India’s primary trading partner has reignited discussions regarding India’s trade dependency and the need for diversification. India’s reliance on critical products such as telecom and smartphone parts, pharmaceuticals, and advanced technology components from China has come under scrutiny, prompting calls for strategic measures to mitigate risks and explore alternative trade avenues.

As India navigates its trade relations with China and the US, policymakers are faced with the challenge of balancing economic interests while ensuring resilience and sustainability in the face of global uncertainties. The evolving trade dynamics underscore the need for strategic planning and proactive measures to optimize India’s trade portfolio and foster long-term economic growth.