In a big boost to India's Atma Nirbhar Bharat campaign, the trade deficit with China during the first five months of the current fiscal has nearly halved over the same period last year. The trade deficit between India and China can be attributed to growth in India's exports to mainland China and a major decline in imports on the back of several measures taken by the Centre to stop dumping of products by China.
The trade deficit between India and China from April-August stands at $12.6 billion as compared to $22.6 billion in April-August period of FY20. In FY19, this was $23.5 billion and $26.33 billion in FY18, Business Standard reported. Prime Minister Narendra Modi's Atma Nirbhar Bharat campaign and the Galwan Valley clashes with the Chinese were two main turning points that gave a push to India's efforts to cut trade dependence on China, wherever possible.
At the same time, India continued its push towards enhancing exports to Beijing. Exports to China showed double-digit growth for the fourth month straight in August. The export growth was led by iron and steel shipments, which saw eight-fold growth.
Overall shipments to Beijing grew 27 per cent in April-August compared to 9.5 per cent in the same period last year. Imports, on the other hand, shrunk 27 per cent vs 21 per cent in April-August FY20. The overall export growth during this period peaked during June at 78 percent. It was 48 per cent in May and 23 per cent in July.
Since hostilities broke out between India and China in Galwan Valley in May, New Delhi has been working on policies to scrutinise and stymie the influx of Chinese goods into the country.
The Directorate General of Foreign Trade (DGFT) announced restrictions on import of colour television sets late in July to encourage local manufacturing.
India also wants to prevent trade partners, mainly in Southeast Asia, from rerouting Chinese goods to India. Chinese smartphones' share in Indian market also fell to 72 per cent during the June quarter 2020, from 81 per cent in March quarter 2020.
The government is also planning to impose licensing requirements for import of goods from 20 sectors, including furniture, toys, sports goods, textiles, among others.
The Centre may also hike customs duty on imported active pharmaceutical ingredients (APIs) by 10-15 per cent. Indian pharmaceutical industry depends heavily on imports from China, with 68 per cent APIs and more than 90 per cent antibiotics being sourced from the neighbouring nation.