China Overtakes US Emerges as India's Prime Trade Ally: $118.4B

14 May, 2024

China Overtakes US, Emerges as India's Prime Trade Ally: $118.4B

China has once again emerged as India's top trading partner, overtaking the United States after a two-year interval, as per recent data from the Global Trade Research Initiative (GTRI). In the fiscal year 2024, bilateral trade between India and China reached $118.4 billion, with imports from China rising by 3.24% to $101.7 billion and Indian exports increasing by 8.7% to $16.67 billion. Conversely, trade between India and the US experienced a slight downturn, totaling $118.3 billion in FY24, with Indian exports declining by 1.32% to $77.5 billion and imports decreasing by 20% to $40.8 billion.

The heavy reliance on Chinese imports in critical sectors like telecommunications, pharmaceuticals, and advanced technology has drawn attention. The GTRI report pointed out that India's imports of telecom and smartphone parts from China were valued at $4.2 billion, comprising 44% of total imports in this category, while imports of laptops and PCs amounted to $3.8 billion, representing 77.7% of India’s imports in this sector.

India has responded to this dependency by implementing various measures such as production-linked incentive schemes (PLI), anti-dumping duties, and quality control orders. Furthermore, the import of lithium-ion batteries for electric vehicles, predominantly from China, stood at $2.2 billion, constituting 75% of such imports, underscoring China's crucial role in India’s electrification efforts.

The report also examined changes in trade dynamics with other significant partners, noting a substantial increase in trade with Russia, resulting in a widened trade deficit, and a more balanced growth in trade with Saudi Arabia.