India-China: Trade deficit slips and so do FDI investments

Source :Sify
Author :Sify
Last Updated: Fri, Jul 3rd, 2020, 12:16:47hrs
India-China Flag

New Delhi: Indian government's latest data reveals impact on Sino-Indian trade ties after relations between the two Asian nations turned sour.

The data shows a difference in import-export (trade deficit) slipping to $48.66 billion from $53.56 billion a year ago. In 2019-20, India imported $65.26 billion worth of goods and services while it exported $16.6 billion. India's trade deficit with China was at a high of $63 billion in 2017-18.

India depends on Chinese imports for a wide variety of commodities such as pharmaceutical intermediaries, chemicals, toys, fertilisers, metals and electronic machinery. India also imports a huge consignment of smartphones and electronic and consumer items from China.

India contributes to 14 percent of China's exports. However, strict controls in recent times are reasoned for the dip in trade deficit.

India has issued technical regulations and quality norms on several product categories including chemicals, auto parts, and electronic items.

Trade officials have also been more proactive in slapping anti-dumping duties that have been dumped in India's domestic markets. Doing so has not only helped consumers steer away from faulty products but have also helped sustain the domestic industry.

Post the Doklam and Galwan fiasco, Indian policy makers have emphasized on the need to stay independent via policies such as make-in-India or Atmanirbhar schemes.

The latest data also reveals a dip in FDI investments from China. FDI into India from China for 2019-20 is down to $163.70 million from $229 million  a year ago. China invested $350.22 million and $277.25 million in 2017-18 and 2018-19 respectively as FDI. In the twenty years to March 2020, Chinese FDI into India is estimated at $2.38 billion.

Indian authorities tweaked a major FDI policy without naming China. In April, FDI rules were tweaked for countries sharing a land border with India. Individuals or entities resident in such countries would need the government's permission for investment approval.