What is leading to India’s widening trade deficit with China? Find out what this SBI report says

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Published: June 4, 2018 6:28:54 PM

India’s trade deficit with China expanded to $51.11 billion in FY17, and further to $62.94 billion in FY18, from $38.72 billion in FY13, says an SBI country wrap report.

WTO, dispute panel, India-US case, export subsidies, export Rising imports has made China the largest trade partner of India, says report.

While the demand for Indian goods has been on a decline in the Chinese market, India’s increasing dependence on China for items such as electric equipment, machines, medical and surgical instruments and fertilizers, among others, is widening India’s trade deficit with the country, a report said on Monday. Huge imports of Chinese goods by India has made China the country’s largest trade partner, according to an SBI ‘Country Wrap’ report.

Other top imports from China include organic chemicals, plastic, ships and boats, iron and steel, and optical photographic. The report said that in FY17, while exports to China fell to $10.17 billion compared to $13.53 billion in FY13, India’s dependence on Chinese goods in FY17 surged to $61.28 billion from $52.25 billion in FY13. Thus, India’s trade deficit with China expanded to $51.11 billion in FY17 from $38.72 billion in FY13. In addition, data showed that the trade deficit further widened to $62.94 billion in FY18.

Interestingly, rising imports has made China the largest trade partner of India. In terms of exports, India’s top trading partner is the US to which it exported $42 billion in FY17 as compared to only $10 billion to China. “Trade between India and China has experienced a slowdown in the past few years. Structural transformation of China led to decline in demand for our exports,” said the report.

Although there has been a decline in China’s import of goods from India, certain items like ores, cotton, organic chemicals mineral fuels copper, iron and steel, nuclear reactor and mechanical appliances, electrical machinery and plastic are still there in the list of top export items from India to China, the report said.

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