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At USD 125 billion in 2021, India’s imports from China dilate & experts have mixed emotions

india's imports from china surge
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2021 was a year of recovery for the Indian economy and by the end of the year, EXIM activity had reached an all time high. However, considering the Indo-China political relations and Indian government’s efforts to decrease dependency on China-made goods, our increasing imports from the neighboring country is a matter of mixed emotions. For the first time, bilateral trade between India and China crossed the USD 100 billion mark as it touched USD 125.66 billion in the calender year 2021 and total imports crossed USD 97.52 billion, according to the General Administration of Customs of the People’s Republic of China (GACC). Imports of India’s key 100 commodities from China saw a spurt of two thirds from the previous year, highlighting our intensive dependency on China when it comes to many crucial imports. The range covers everything from chemicals & electronics to textile & auto-components, including finished as well as intermediate goods.

Also read: Nomura reports all time EXIM high for India in the month of December (logisticsinsider.in)

There was a sharp rise in the imports of electrical & electronic goods along with fertilizers, machinery & speciality chemicals (including active pharmaceutical ingredients i.e. APIs). The top 100 items, by value, ballooned from USD 25 billion in 2020 to USD 41 billion by the end of 2021, according to a study of the numbers by Santosh Pai, an Honorary Fellow at the Institute of Chinese Studies in New Delhi. 

Despite its worsening political relations with China, the US has not been able to decrease its reliance on the ‘factory of the world’. India, too, has been unable to decouple from the Chinese economy, despite the Government of India’s efforts. India’s China-dependence syndrome could increase further when our manufacturing industries recover fully to the pre-pandemic levels.”

Biswajit Dhar, Trade Economist and Professor, Centre for Economic Studies and Planning, School of Social Sciences, JNU

To look at a breakdown of the most imported products, import of integrated circuits rose by 147% while laptops/PCs rose by 77% and import of oxygen therapy apparatus grew 4x. Among chemicals, acetic acid saw a striking boost of more than 8x import. The import of petroleum (crude) and petroleum products, pearls, precious and semi-precious stones, and also that of coal, coke, and briquettes also jumped significantly, according to Foreign Trade Performance Analysis (FTPA) by India’s Ministry of Commerce and Industry.

As per the experts, the increased imports are a result of the upturn in domestic demand for finished products from China and India’s export potential growth in global terms, igniting a need for the intermediary goods. The global supply chain disruptions have been a major and significant reason for these goods being imported from China, apart from the fact that these finished as well as intermediate goods are not made in India in sufficient quantities. For instance in the case of coking coal previously sourced from Australia and Indonesia. However, the import numbers have received mixed reactions from the experts.

If the growth in imports of finished items such as toys, electronics, or furniture, which we could be manufacturing in India, is not a good dependency, the fact that we are acquiring new intermediate goods, for instance, is probably a good development in the broader picture as it means we are emerging as a manufacturing hub and need new inputs to match the global demand for a finished Indian product. The other question is which of these are short-term changes because of disruption during the pandemic, and which are longer-term trends that we need to consider and deal with, and ask whether we can start manufacturing in India rather than still buying from China.”

Santosh Pai

On a positive note, while imports are escalating, exports to China are also flourishing. According to Directorate General of Commercial Intelligence and Statistics (DGCIS) data, Indian exports to China jumped to $24 billion in 2021, compared to $19 billion in 2020 and $17.1 billion in 2019 – non-basmati rice, exotic vegetables, soybean & fruits stealing the show. China is already a 6 trillion consumer market and is poised to grow in the upcoming years. It will be greatly beneficial to the Indian economy if the Indian exports can tap into this lucrative market which already has more than 50 countries exporting to China.

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