Sino-Indian ties on a roll, despite hiccups

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joint-study group to study the feasibility of a bilateral FTA. However, leading Indian trade bodies have argued that resultant tariff cuts following the FTA will help Chinese goods flood Indian markets. A recent study carried out by the Federation of Indian Chambers of Commerce & Industry (FICCI) states that India’s trade deficit with China has widened in the last five years. So much so that trade deficit has exceeded country’s total exports to China in 2006-07. In fact, trade deficit with China in the first half of the year is already very close to India’s deficit for the full year in 2006-07, which implies that the deficit could be very high in the current year or it could be almost double of our deficit in the previous year.

According to the study, in 2001-02, the value of India’s total imports was $51.4 billion. Out of these, imports from China were $2036.39 million. This constituted about 4% of India’s total imports.

India’s total imports in 2006-07 were $185.7 billion and imports from China constituted 9.4% of our total imports—$17.4 billion. Hence, while India’s total imports have increased about three-and-a-half times between 2001-02 and 2006-07, imports from China have increased by over eight-and-a-half times over the same period.

With the exception of Saudi Arabia, this has been the most pronounced increase in imports over the period under consideration. Imports from Saudi Arabia constituted just 1.22% of total imports in 2001-02 that increased to 7.2% in 2006-07 whereas, most of the other major countries saw their share either declining or hardly changing in India’s imports.

Imports from US in 2001-02 constituted 6.12% of Indian total imports that increased marginally to 6.31% in 2006-07. Imports from Switzerland actually declined from 5.6% in 2001-02 to 4.9% from total imports in 2006-07. The decline in the case of the UK was even more pronounced, from 4.2% in 2001-02 to about 2.25% in 2006-07. This also indicates how Chinese imports are replacing the imports from other countries. As far as India’s position in Chinese world imports in the last few years, the country’s share continues to be insignificant in Chinese imports. While India’s share in Chinese world imports increased from 0.7% in 2001 to 1.48% in 2005, but it came down again in 2006 to 1.3%.