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India-China trade

Date: 02 March 2021 Tags: World Economy


 China reclaimed its position at the top of the list of India’s major trade partners, even as relations with Beijing plunged to new lows.



  • Trade between India and China from January to December 2020 stood at $77.67 billion. This figure was still higher than the $75.95 billion traded between India and the US last year.

  • While India has been trying to reduce its trade imbalance and dependence on Chinese imports for several years now, it was only in 2018 that the US surpassed the value of goods that China traded with India in a financial year.

  • China got back to the top of the trade partners’ list in a year in which armies of the two countries remained locked in a tense standoff in eastern Ladakh.

  • In 2020, India committed itself to self-reliance through the Atma Nirbhar Bharat campaign, and implemented measures to restrict Chinese investments in the country.

  • Dozens of China-linked apps were banned, a major infrastructure contract awarded to a Chinese firm was cancelled, and the import of certain kinds of power equipment was banned.

  • Production-linked incentive (PLI) schemes were announced across sectors to reduce dependence on critical goods from China, even though building self-reliance in these critical sectors will likely take several years.

Exports and imports

  • Electrical machinery and equipment, nuclear reactors, boilers, machinery, and mechanical appliances continued to top the list of goods imported from China in 2020.

  • Exports of Indian iron and steel to China jumped over 2019, with shipments touching $2.38 billion during January to December 2020.

  • Iron and steel exports to China in 2019 were around $567 million. Export of ores, slag, and ash increased by 62 per cent to $3.48 billion in 2020 from $2.15 billion in 2019.

  • The increased exports, including those of iron and steel, could be the result of China’s focus on domestic infrastructure projects.