With growing India’s dependence on Chinese industrial goods like telecom, equipment and electronics, Beijing’s share in New Delhi’s imports of such goods rose to 30% from 21% in the last 15 years, a report stated.
According to the report by the financial assume tank Global Trade Research Initiative (GTRI), the rising commerce deficit with China is a reason behind concern, and the strategic implications of this dependency are profound, affecting not solely financial but in addition nationwide safety dimensions.
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From 2019 to 2024, India’s exports to China have stagnated at round $16 billion yearly, whereas imports from China have surged from $70.3 billion in 2018-19 to over $101 billion in 2023-24, ensuing in a cumulative commerce deficit exceeding $387 billion over 5 years.
The Indian authorities and industries should consider and doubtlessly recalibrate their import methods, fostering extra diversified and resilient provide chains, GTRI founder Ajay Srivastava stated.
This is crucial not solely to mitigate financial dangers but in addition to bolster home industries and scale back dependency on single-country imports, particularly from a geopolitical competitor like China, he added.
“Over the last 15 years, China’s share in India’s industrial product imports has increased significantly, from 21% to 30%.
“This development in imports from China has been a lot sooner than India’s total import development, with China’s exports to India rising 2.3 occasions sooner than India’s complete imports from all different international locations,” the report said.
In 2023-24, India’s total merchandise imports amounted to $677.2 billion, with $101.8 billion of that coming from China.
Data | From 5% to 15%, China’s share in India’s imports tripled in last two decadesÂ
This means China accounted for 15% of India’s total imports.
Out of these imports from China, $100 billion or 98.5% were in major industrial product categories.
“When in contrast to India’s international imports of those industrial merchandise, which complete $337 billion, China’s contribution is kind of important, representing 30% of India’s imports in this sector. Fifteen years in the past, China’s share was simply 21%,” it added.
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The key sectors, where New Delhi’s dependence is rising significantly, include electronics, telecom and electrical; machinery; chemicals and pharmaceuticals; products of iron, steel and base metal; plastics; textiles and clothing; automobiles; medical, leather, paper, glass, ships, aircraft and remaining categories.
During April-January 2023-24, the electronics, telecom and electrical products sectors had the highest import value at $67.8 billion, with China contributing $26.1 billion.
“This represents a considerable 38.4 per cent of the overall imports in this class, indicating a heavy dependence on Chinese digital goods and elements,” it said.
In the machinery sector, China accounts for $19 billion, which is 39.6% of India’s imports in the sector.
This underscores China’s key role as a supplier of machinery to India, Srivastava said.
India’s chemical and pharmaceutical imports during the period stood at $54.1 billion. Out of this, $15.8 billion came from China.
This resulted in a Chinese share of 29.2%, highlighting the importance of Chinese chemical and pharmaceutical products in India.
Similarly, the report said the total imports for plastics and related articles stand at $18.5 billion, with China providing articles worth $4.8 billion.
This accounts for 25.8% of the total imports in this sector.
Srivastava also said that half of the imports from China consist of capital goods and machinery, indicating a critical need for focused research and development in this area.
Intermediate goods like organic chemicals, APIs (Active Pharmaceutical Ingredients), and plastics, which represent 37% of imports, show a pressing need for upgrading these industries, he said, adding that consumer goods make up 12% of the imports, while raw materials are less than 1%.
The report added that many products imported from China, such as textiles, apparel, glassware, furniture, paper, shoes and toys are from categories dominated by micro, small, and medium enterprises (MSMEs), and most of these items could potentially be produced domestically.
“Overall, India imports a broad array of merchandise from China, from excessive to low know-how gadgets, highlighting important gaps in India’s industrial capabilities throughout varied sectors,” it added.
Chinese companies are involved in India’s energy, telecommunications, and transportation sectors, and they play critical roles in smartphones, electronics, electric and passenger vehicles, solar energy, engineering projects and many other sectors, it said.
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The report said that so far, imports were carried out by Indian firms but now with the entry of Chinese firms into the Indian market, India’s industrial product imports are set to rise at an accelerated pace.
“As the Chinese corporations working in India will favor sourcing most necessities from their mum or dad corporations, Indian imports will rise sharply. For instance, in the following few years, each third electrical automobile (EV) and lots of passenger and industrial autos on Indian roads may very well be these made by Chinese corporations in India alone or by way of joint ventures with Indian corporations,” the report stated.
The large-scale entry of Chinese automakers into India will influence the home auto/EV producers, corporations working in the EV worth chain house and battery improvement, it added.
