INDIA’S MASSIVE TRADE DEFICIT WITH CHINA; LOWEST IN FIVE YEARS

India’s trade deficit with China sinks to $48.66 billion in 2019-2020 which is lowest in five years. Now what is the trade deficit? Trade deficit can be defined as an amount of imports of a particular country exceeding the amount of its exports. According to the data, exports to China in the last financial year stood at $16.6 billion, while imports accumulated at $65.26 billion. India and China are two very well-known countries with ancientCivilizations, their partnership in every major field like trades has made an ideal example since over 2000 years. But from the last few weeks the India- China relation has deteriorated. The main cause of the clash was a dispute over the sovereignty of the widely separated Aksai Chin and Arunachal Pradesh border regions. So, it can be assumed that this clash played a vital role along with lower imports and higher exports as the major cause of India’s significant reduction of trade deficit.

The major imports from China cover electronic gadgets (clocks, watches, smart phones, calculator, laptop etc.) plastic materials (toys, plastic containers, bottles), sports goods, musical instruments, furniture, chemicals, irons, mineral source, metals and fertilizers.

Foreign Direct Investment (FDI) from China in India fell to $163.78 billion in 2019-2020 from $229 billion in previous monetary, the data said. 14% India’s imports are recorded by China and the major portion comes from critical pharma ingredients and telecom.

 India was able to captivate FDI worth $2.38 billion from 2000 to March 2020 but in April the government has narrowed the standards for FDI coming from the neighboring countries especially which share a land border with India like China.  As per FDI, any company or individual can steep in any field with the government approval.

Top sectors like metallurgical (USD 199.28 million), services (USD 170.18 million), electrical equipment (USD 185.33 million) which showed maximum FDI from China in the period of April 2000- March 2020.

Around 371 products have been identified for technical regulations. Out of 371, technical regulations have been assigned for 150 products worth $47 billion of imports.

The reduced imports from China also helped the U.S. extend its lead as India’s largest training partner against trade off $88.8 billion with US India straight with China was just $82 billion. 2019-2020 year’s trade deficit of India is almost similar to 2014-15, when the Narendra Modi took first post, but it was 34% higher than 2013-14, stimulating the government to suggest that the further steps taken in recent months have yielded results.

In that definite time when entire world has been put off financially due Corona virus pandemic accompaniedby India-China war; in the standing of that point taking such steps like restricting the imports from China would be a great decision for India.

The Country and countrymen both are hopeful, at the same, of time what lies ahead in future.

“A large chunk of these originate from China. We will pursue import substitution,” a senior official said.