India China Trade

As of 2023-24, China was India’s fourth-largest trading partner in export.

Introduction

The relationship between the two giants of Asia, and the world, has been progressing at a tremendous pace. On April 1, 1950, India became the first non-socialist bloc country to establish diplomatic relations with the People’s Republic of China. A Double Taxation Agreement was signed between India and China on July 18, 1994. The two countries have also shown interest in taking part in a multilateral trade system as per the WTO commitments. Today, India and China are top trading partners and maintain significant economic and bilateral relations.

India-China Trade

• Bilateral trade between India and China in FY23 stood at US$ 113.83 billion against US$ 115.83 billion in FY22.
• As of 2022-23, China was India’s third-largest trading partner.
• Bilateral trade between India and China stood at US$ 136.26 billion in the year 2022 and US$ 125.62 billion in 2021 with a growth of 8%.
• In the year 2020, India became the 16th largest trade partner of China.
• In FY23, China had a 13.8% share in India's total imports. India imported goods worth US$ 715.9 billion from the world, including goods worth US$ 98.5 billion from China.
• China occupies the 21st position in FDI equity inflows into India with a cumulative FDI amount of US$ 2.50 billion from April 2000-Spetember 2023.

Major exported items from India to China with amount & quantity

• India exported 4,455 commodities to China in FY23.
• India’s export to China stood at US$ 15.33 billion in FY23 and US$ 21.26 billion in FY22.
• Major exported items from India to China include iron ore (US$ 1.9 billion), followed by engineering goods (US$ 1.64 billion), others (US$ 1.25 billion), marine products (US$ 1.03 billion), and petroleum products (US$ 796 million), etc. April- November 2023.
• India’s export to China stood at US$ 10.29 billion during April-November 2023.

Major imported items by India from China with amount & quantity

• India imported 7,481 commodities from China in FY23.
• Imports from China to India stood at US$ 98.50 billion in FY23 and US$ 94.57 billion in FY22.
• Major items imported from China include electrical machinery and equipment (US$ 19.9 billion), followed by nuclear reactors and parts (US$ 14.9 billion), organic chemicals (US$ 8.19 billion), plastic and articles (US$ 3.8 billion), and fertilizers (US$ 1.9 billion) etc. in April- November 2023.
• Imports from China to India stood at US$ 68.01 billion during April-November 2023.

Recent Trends and Developments

• On April 1, 2020, India and China marked 70 years of their diplomatic relations.
• In May 2014 India was invited by China to join the Asian Infrastructure Investment Bank (AIIB) after committing to the ‘Key Elements of AIIB’, to join in the multilateral negotiations on the MoU for the establishment of AIIB. As of September 15, 2022, 33 projects (25 Sovereign, 11 Non-Sovereign) have been approved for financing of US$ 8.75 billion.
• New Development Bank (NDB) which has established its office in Shanghai, opened its India Regional Office in Gujarat International Finance Tec-City in June 2022. India is the biggest borrower in NDB with 19 projects approved with a commitment of US$ 6.92 billion as on August 31, 2022.
• A bilateral meeting between India and China was held at the third G20 Finance Ministers and Central Bank Governors (FMCBG) meeting at Gandhinagar on July 18, 2023. During the meeting, Union Finance Minister Ms. Nirmala Sitharaman met Mr. Liu Kun, Minister of Finance, People’s Republic of China. The Ministers discussed the G20 Finance agenda and the state of their economies, inflation, and trade and recognized the importance of a good business environment for economic growth and development.

Investments and Economic Relations

The bilateral trade between India and China has grown four-fold in the past decade. The India-China trade crossed US$ 100 billion for the third consecutive year as it amounted to US$ 113.83 billion in FY23.

With increasing bilateral trade in the last few years, many Indian companies have started setting up Chinese operations to service both their Indian and MNC clientele in China. Apart from this, more than 100 Chinese companies have established offices/operations in India. Many big Chinese names in the field of machinery and infrastructure construction have won projects in India and have opened project offices in India.

Conclusion

China has already been the top trading partner of India in recent times. The economic relationship between the two countries is considered to be one of the most significant bilateral relations in the contemporary global economic scenario. India has also made sustained efforts to achieve a more balanced trade with China, including bilateral engagements to address the non-tariff barriers on Indian exports to China. With the great exchange of goods and services, the two nations have been moving forward at an incredible pace and represent the most dynamic economies which are emerging as new trendsetters in international relations.