India has highest trade deficit with China but gap narrowing: Goyal

India has the highest trade deficit with China in goods but the gap expanded at a lower pace during 2014-15 to 2023-24 as compared to the previous 10 years, Commerce and Industry Minister Piyush Goyal said on Friday. In a written reply to a question in the Rajya Sabha, the minister said that the trade deficit has increased by compound annual growth rate (CAGR) of 42.85 per cent during 2004-05 to 2013-14, while the same has come down to 6.45 per cent during 2014-15 to 2023-24 which clearly indicates the success of the government in containing rate of growth of excessive import growth from China during the past ten years. It may also be noted that from 2004-05 to 2013-14, trade deficit grew by approximately 24.8 times while it grew only by 1.75 times from 2014-15 to 2023-24, he said.

“India has the highest merchandise trade deficit with China,” Goyal said.

India’s exports to China in 2023-24 stood at USD 16.65 billion, while imports aggregated at USD 101.75 billion, leaving a trade deficit of over USD 85 billion.

China has emerged as the largest trading partner of India with USD 118.4 billion two-way commerce in 2023-24, slightly edging past the US.

He also said that most of the goods imported from China are capital goods, intermediate goods and raw materials like Active Pharmaceutical Ingredients, auto components, electronic parts and assemblies, mobile phone parts, which are used for making finished products, that are also exported out of India. “These goods are imported for meeting the demand of fast expanding sectors like electronics, pharma, telecom and power in India. The rise in import of electronic components, computer hardware and peripherals, telephone components, can be attributed to transformation of India into a digitally empowered society and a knowledge economy,” the minister said. He added that India’s dependence on imports in these categories is largely due to inadequate domestic supply to meet growing demand due to rising income levels.

Replying to another question on the same subject, Minister of State for Commerce and Industry Jitin Prasada said imports from China have shown a mixed trend in the last decade (2014-15 to 2023-24).

“The imports had risen from USD 60.41 billion in 2014-15 to USD 76.38 billion in 2017-18 but then there was a declining trend in the next three years with imports falling to USD 65.21 billion in 2020-21. The imports have risen in the last three years (2021-22 to 2023-24),” he said.

Prasada informed that the government has taken several initiatives to reduce dependency on imports.

Citing an example, the minister said that the import of mobile phones has decreased from Rs 48,609 crore in 2014-15 to Rs 7,674 crore in 2023-24.

In the recent period, the decline in imports has also been observed in sectors like electronics, organic chemicals and fertilizer.