Context: India’s trade deficit with China fell to $48.66 billion in 2019-20 on account of the decline in imports from the neighbouring country.

India China trade relations:

  • Chinese FDI has dipped to $163.78 million in 2019-20 from $229 million in the previous fiscal.
  • Exports to China in the last financial year stood at $16.6 billion, while imports aggregated at $65.26 billion, the data showed. The trade deficit stood at $53.56 billion in 2018-19 and $63 billion in 2017-18.
  • The main imports from China include clocks and watches, musical instruments, toys, sports goods, furniture, mattresses, plastics, electrical machinery, electronic equipment, chemicals, iron and steel items, fertilisers, mineral fuel and metals.

Source: the hindu

  • India has time and again raised concerns over the widening trade deficit with China. 
  • The government is framing technical regulations and quality norms for several products to reduce dependence on Chinese imports.
  • As many as 371 products have been identified for technical regulations. Of these, technical regulations have been formulated for 150 products worth $47 billion of imports.
  • Over 50 quality control orders (QCOs) and other technical regulations have been notified in the past one year, including those on electronic goods, toys, air conditioners, bicycle parts, chemicals, safety glass, pressure cooker and steel and electrical items.
  • It has also imposed anti-dumping duties on several goods, which are being dumped in the domestic market at below the average prices from China with a view to guarding domestic players from cheap imports.
  • China accounts for about 14% of India’s imports and is a major supplier for sectors like mobile phones, telecom, power, plastic toys, and critical pharma ingredients.
  • Foreign Direct Investment (FDI) from China in India has dipped to $163.78 million in 2019-20 from $229 million in the previous fiscal.
  • Tightened FDI norms: As per the amended FDI policy, a company or an individual from a country that shares land border with India can invest in any sector only after getting government approval. 


India China relations:

Commercial and Economic Relations

  • In 2008, China replaced the United States as India’s largest trading partner in goods. In 2018, bilateral trade reached an all-time high of US$ 95.54 billion.
  • India was the 7th largest export destination for Chinese products and the 27th largest exporter to China.
  • India’s major export items included cotton, copper, and diamonds/ natural gems. Major Chinese exports include machinery, telecom and power-related equipment, organic chemicals, and fertilizers.

Strategic relations:

  • India and China have had a strategic partnership—specifically, a strategic and cooperative partnership for peace and prosperity—since 2005.
  • The bilateral focus has largely been on the settlement of the boundary question, followed by the strengthening of economic and trade ties.
  • India recently hosted the 6th India-China Strategic Economic Dialogue that focused on collaboration between two countries on areas of infrastructure, energy, high-tech, resource conservation, pharmaceuticals
  • Both India and China have held the maritime security dialogue which needs to be expanded by incorporating multilateral cooperation with other nations.

Banking and Investment

  • Chinese investment in Indian start-ups has grown over the years. Cumulative Indian investment in China until September 2017 was US$ 851.91 million.
  • More than 100 Chinese companies have established offices/operations in India.
  • India remains the top borrower from the China-led and China-created multilateral development bank AIIB.

Dialogue Mechanisms - The India-China Economic and Commercial Relations are shaped through various dialogue mechanism such as

  • Joint Economic Group (JEG) led by the Commerce Ministers of both sides,
  • Strategic Economic Dialogue (SED) led by the Vice-Chairman of NITI Aayog and the Chairman of the National Development and Reform Commission (NDRC) of China,
  • the NITI Aayog - Development Research Center (DRC) Dialogue and the Financial Dialogue

Cultural Relations

  • India-China cultural exchanges date back to many centuries. 
  • Ancient Indian monk-scholars such as Kumarajiva, Bodhidharma, and Dharmakshema contributed to the spread of Buddhism in China. Similarly, Chinese pilgrims Fa Xian and Xuan Zang also undertook journeys to India.
  • India constructed a Buddhist temple in Luoyang, Henan Province, inside the White Horse Temple complex which was said to have been built in honor of the Indian monks Kashyapa Matanga and Dharmaratna.
  • India and China have entered into an agreement on the co-production of movies.
  • Yoga is becoming increasingly popular in China. China was one of the co-sponsors to the UN resolution designating June 21 as the International Day of Yoga.

Education Relations

  • India and China signed the Education Exchange Programme (EEP) in 2006.
  • Under this agreement, government scholarships are awarded to 25 students, by both sides, in recognized institutions of higher learning in each other’s country.

Indian Diaspora in China

  • Currently, the strength of the Indian community in China is at around 30,000, a major portion of which comprises students. 
  • A number of Indians and PIOs are also working as professionals with various multinational and Indian companies. 

Cooperation in international organizations:

  • The institutionalization of Sino-India relations was first of all marked by the establishment of BRIC in 2008 (expanded into BRICS by absorbing South Africa in 2010) that, as an international platform of the emerging market countries.
  • The joining of India in the Shanghai Cooperation Organisation (SCO) marked an even greater step forward.
  • In the New Development Bank (NDB) based in Shanghai, both India and China are active members.
  • In the Asia Infrastructure Investment Bank (AIIB) based in Beijing, India even ranks as the second-largest shareholder and, meanwhile, has benefited most from the project grants approved by the AIIB so far.
  • India, Russia, China are uniting on rising protectionism, WTO reforms.


Image Source: the hindu