India’s import reliance on China deepening, says report

Global Trade Research Initiative (GTRI), an economic think tank has stated that India’s reliance on imports of industrial products from China, so much so that in the past decade and a half, China’s share in Indian imports has risen from 21% to 30%, making it clear in the process that the principle of economic self-reliance envisages an arduous journey for Indian policymakers in the days ahead.
To make matters worse, India’s annual exports to China have more or less stagnated around $16 billion. In value terms Chinese imports have expanded from $70.3 billion in 2018-19 to more than $101 billion in 2023-24. That has given rise to a trade deficit of $387 for India.

Incidentally, half of India’s imports from China consist of capital goods and machinery.
The GTRI report said that India’s growing dependence is particularly visible in key areas such as electronics, telecom, electrical products, machinery, chemicals, pharmaceuticals, iron, steel, base metals, plastics, textiles, clothing, automobiles, medical supplies, leather goods, paper, glass, ships, aircraft, and other remaining categories.

In the report, the founder of GTRI Ajay Srivastava has underscored the need for the Centre and India Inc to reassess import strategies.

“Over the last 15 years, China’s share in India’s industrial product imports has increased significantly, from 21 per cent to 30 per cent. This growth in imports from China has been much faster than India’s overall import growth, with China’s exports to India growing 2.3 times faster than India’s total imports from all other countries,” the report said.

In 2023-24, India’s registered a total merchandise import of $677.2 billion and China’s contribution was $101.8 billion, which is 15% of the total merchandise imports.

Of these imports from China, as much as 98.5% or about $100 billion is constituted by major industrial product categories. “When compared to India’s global imports of these industrial products, which total USD 337 billion, China’s contribution is quite significant, representing 30 per cent of India’s imports in this sector. Fifteen years ago, China’s share was just 21 per cent,” the report added.

Segregated recent figures would also warn New Delhi’s policymakers.
In April-January period of 2023-24, electronics, telecom, and electrical products were imported totalling to $67.8 billion and China constituted $26.1 billion of that amount. “This represents a substantial 38.4 per cent of the total imports in this category, indicating a heavy dependence on Chinese electronic goods and components,” GTRI said.

During the period, Beijing accounted for as much as 39.6% of the machinery sector imports by India. The share in India’s pharma imports stood at 29.2% and in plastics and related items, accounted for 25.8% of India’s total imports in this period.

GTRI emphasised that many items imported from China such as textiles, apparel, glassware, furniture, paper, shoes, and toys are from categories where micro, small, and medium enterprises (MSMEs) rule. It added that many of the items could be manufactured in India itself.

“Overall, India imports a broad array of products from China, from high to low technology items, highlighting significant gaps in India’s industrial capabilities across various sectors,” it added.
The entry of Chinese companies in India is also supposed to increase New Delhi’s reliance on Beijing since these companies would like to import from countries in their own country. “As the Chinese firms operating in India will prefer sourcing most requirements from their parent firms, Indian imports will rise sharply. For example, in the next few years, every third electric vehicle (EV) and many passenger and commercial vehicles on Indian roads could be those made by Chinese firms in India alone or through joint ventures with Indian firms,” the report added.