India’s double-digit growth in exports to China, in combination with a sharp dip in imports, nearly halved the trade gap between the two countries in the first five months of the current fiscal year (2020-21, or FY21) over the same period of 2019-20 (FY20).
India’s trade deficit with China stood at $23.5 billion in the corresponding period of 2018-19 and at $26.33 billion in 2017-18.
The curbs on imports from China, alongside the Atmanirbhar Bharat campaign, has led to a contraction in India’s trade deficit with China to $12.6 billion between April and August of FY21, from $22.6 billion in the year-ago period.
Exports to China witnessed sustained double-digit growth for the fourth straight month in August, led by eightfold rise in iron and steel shipments.
In the April-August period, outbound shipments to Beijing recorded an expansion of 27 per cent, compared to 9.5-per cent expansion in the same period last year.
Imports shrunk by 27 per cent in the first five months to $21.5 billion and by 21 per cent in August alone.
As revealed the data by the Department of Commerce, India’s exports to China grew 15 per cent in August, with shipments worth $1.68 billion.
Exports growth to Beijing peaked in June at 78 per cent and expanded 48 per cent in May and 23 per cent in July.
India’s exports basket to China mainly accounted for iron and steel, which rose 833 per cent to $1.8 billion till August this year, compared with $192 million last year. China accounted for 35 per cent of India’s iron and steel outbound shipments in the first five months of the fiscal year, against 5.3 per cent in the corresponding period last year.
China also made up for 90 per cent of India’s exports of iron ore worth $1.6 billion, a fourth of exports of organic chemicals worth $809 million, and 16 per cent of exports of marine products worth $351 million during the five months.
The import basket is largely dominated by telecom instruments, organic chemicals, and industrial equipment for dairy, etc.
The United Arab Emirates (UAE) has been displaced to the third largest export destination for India this fiscal year, accounting for 5.29 per cent of total outbound shipments.
China is the only destination among India’s top five export partners that is exhibiting growth. Exports to the US are down 24.6 per cent. In the case of UAE, they are down 59.2 per cent. Shipments to Singapore also contracted 24.2 per cent and 26.7 per cent, respectively.
China’s exports continued to expand in August, growing 9.5 per cent. In absolute terms, it was at the third-highest level ever exported by the country in a month at $235.3 billion on account of sustained demand for medical equipment and electronic items