Heavy imports is making India lost the trade battle against China


India is struggling to match up with the trade race with US and China.
In a summit last year in April, Chinese President Xi Jinping promised Narendra Modi to increase its imports from India starting from rice , sugar and pharmaceuticals but it has had minor impact on a widely imbalanced trading relationship.
New figures as per China’s general administration of customs give an alarming look of trade relations of India and China. In 2018, two-way trade reached $95.5 billion, up 13 per cent from the previous year (when it stood at $84.4 billion). India’s imports, however, made up just $18.8 billion.
India’s trade has increased but also its trade deficit has increased. The imbalance has increased to $ 58 billion which was $51 billion in 2017. China’s exports to India comprises upto 80 percent of two-way trade which comes to $76.6 billion.
Amidst the history of sour relationship between the two nations, trade has tried to play an important role since the past two decades. Two way trade is upto one third in the past five years.
As per the talks between Indian Prime Minister and Chinese President about the trade of rice and sugar, India exports them to China but according tot experts exports of rice and sugar would not make a huge difference to this deficit.
Indias largest concern is lack of market access for IT and pharma companies. The problem lies only with India and this is the main target of US to carry out a trade war with China. Moreover, US market and technology is still invaluable for China.
Part of India’s problem is that it has lacks to come up with proper trade strategies. India opened a market worth ton of billions of dollars for China without getting Chinese investments in India or even securing a space for Indian companies in China.
China has imposed a range of tariff barriers in various sectors of Indian trade especially IT and Pharma where these companies suffer a backlog.
China’s market is complex and like most of the growing countries India does not a have a chamber of commerce in Beijing to navigate the companies regarding the rules and policies. The Confederation of Indian Industry (CII) has had a representative office in Shanghai that has admirably championed Indian firms, but with very modest resources.
Lack of trade strategy in India has helped China to enter from telecom to power and profit from Indian organization without any research and without opening markets for India in China. India is now the biggest overseas market for Chinese mobile phones, there are only a handful who manufacture in India.
Beijing has been smart enough to attract foreign companies at the same time absorbing their expertise and development. India needs to follow a coherent strategy and find international markets. Or make China to manufacture in India and not merely sell in India.