The meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping at the BRICS Summit 2024 in Russia is a positive step, but it may not bring a big change to India China trade and economic relations. Building a strong and balanced economic relationship will need long-term efforts to reduce India’s dependence on Chinese imports and address trade imbalances.
Even before the 2020 Galwan Valley clash, Chinese investments in India were relatively low, totaling only $2.5 billion from April 2000 to March 2024, especially compared to investments from the US and Japan. In 2020, India introduced stricter rules requiring government approval for Chinese investments, slowing down the flow of funds.
India’s exports to China were around $16.65 billion by FY24, focused on raw materials like iron ore, marine products, cotton, and certain chemicals. However, imports from China surged to $101.74 billion in the same period. Improved Version: China’s products are very popular in India’s factories. Now, about 30% of what India buys for its factories comes from China. For example, electronics, telecom, and electrical products account for 38.7% of India’s global imports, and chemicals and pharmaceuticals for 28.7%.
To reduce its trade deficit with China and support balanced economic relations, India needs to enhance its manufacturing capabilities, diversify import sources, and increase export growth. In labor-intensive sectors like garments or shoes, Chinese investments might enter but could challenge local manufacturing. In high-tech areas like electronics and electric vehicles, Chinese companies may only assemble products in India while still importing most components from China.
GTRI warns that India’s growing dependence on Chinese imports raises concerns about economic resilience and the risks of over-relying on a single partner, especially with the fragile political relationship between the two countries. The data provider emphasized that Import export data of India reflects this ongoing dependency on Chinese supply chains across major industries, making the challenge more pressing for the future.
In summary, while there are hopes for better trade relations through a global import export data provider, the reality of the situation suggests that significant changes in import export data between India and China are not expected soon, particularly given the historical context of Chinese investments in India and the current reliance on Chinese goods.
