China has surpassed the United States to emerge as India’s largest trading partner for the fiscal year 2023-24, according to data released by the Global Trade Research Initiative (GTRI). Despite enduring military tensions along their borders over the past four years, the economic ties between India and China have flourished, with bilateral trade reaching USD 118.4 billion, slightly edging past the USD 118.3 billion trade with the US.
The GTRI report unveiled a notable shift in India’s trade dynamics with its top partners, reflecting significant transformations in both exports and imports, as well as trade surplus or deficit across various sectors. While the US held the title of India’s top trading partner in the preceding two fiscal years, China’s ascent marks a remarkable change in the trade landscape.
Rise in Trade with China: India’s exports to China witnessed a substantial 8.7 percent increase, totaling USD 16.67 billion in the last fiscal year. Key sectors such as iron ore, cotton yarn/fabrics/made-ups, handloom products, spices, fruits and vegetables, plastic, and linoleum experienced healthy growth in exports to China. Conversely, imports from China to India surged by 3.24 percent, reaching USD 101.7 billion.
Dynamics with the US: In contrast, exports from India to the US experienced a slight decline of 1.32 percent, amounting to USD 77.5 billion in 2023-24. Import figures also dipped, by approximately 20 percent, standing at USD 40.8 billion. Despite this, trade with the US exhibited growth over the years, with exports increasing significantly by 47.9 percent and imports by 14.7 percent, resulting in an expanded trade surplus for India.
Implications and Concerns: The GTRI report highlighted concerns over India’s stagnant exports amidst rising imports, particularly in the case of China. While India experienced a marginal decline in exports to China, imports surged significantly, leading to an expanding trade deficit. This trajectory raises apprehensions about India’s trade balance and underscores the need for strategic economic measures to address the widening gap.
Historical Context: China’s reclamation of the top trading partner status is a significant development in India’s trade history. Prior to China, the UAE held this position, with the US briefly occupying it in the preceding two fiscal years. The data underscores the evolving nature of India’s trade relationships and the dynamic interplay of economic forces on the global stage.
