India started buying less Chinese goods, but sales of Indian goods to China increased, how so?

Posted on 11th Aug 2020 by rohit kumar

Despite Prime Minister Narendra Modi's slogan of self-sufficiency for the first time in April and the tensions that began along the border with China since May, bilateral trade has increased for the last three months.

 

Since the violent confrontation along the border, the Indian government has taken some concrete steps to reduce dependence on Chinese imports, including curbing TV and mobile phone imports from China.

 

But experts who keep an eye on China say that if these steps take effect, it will be properly known only after the next three months.

 

Experts say that the ban does not mean that the India-China bilateral trade will reduce rapidly.

 

"It (curb against China) is a tool used to express resentment over border tensions as well as to reduce imbalances in bilateral trade," says Dr. Faisal Ahmed, a specialist in Chinese affairs at the FORE School of Management in Delhi. There is also an effort. "

 

He further adds, "The negative bilateral trade balance with China has been a serious issue for India, forcing the Indian government to stay out of the Regional Comprehensive Economic Partnership (RCEP) organization as it could further increase imports from China. is".

 

Like many previous years, in 2019 also the bilateral trade balance was completely in favor of China. China accounted for two-thirds of bilateral trade of about $ 100 billion.

 

Balancing business

Due to these steps of India, there has been a slight improvement in India's favor in balancing bilateral trade with China.

 

Interestingly, on the one hand, there has been a decrease in imports from China from January to June, on the other hand, there has been an increase in the goods sent from India to China.

 

In April, India sold goods worth about $ 2 billion to China, which increased to about $ 4.5 billion in July. Indian exports to China have increased by 6.7 percent from January to June this year.

 

China has released the latest six-monthly report data between the two countries according to which Chinese imports for India have decreased by 24.7 percent from January to June this year as compared to last year. But if we look at the imports from April to July, you will find that it is increasing every month. Chinese imports were $ 3.2 billion in April, which increased to $ 5.6 billion in July.

 

Commenting on the decrease in Chinese imports, experts say that there are two main reasons for this: the import-export stalled during the lockdown and the economies of both countries shrink.

 

The impact of the virus was badly felt on international trade. Apart from this, the delay in the clearance of Chinese goods at Indian ports is also said to be one of the reasons.

 

Economic expert Vivek Kaul says that by looking at the data, it seems that the leaders and traders of both countries are publicly adopting whatever attitude they are taking when it comes to the real business.

 

Indian traders and corporates feel that if they are doing business with China, then they are doing business. The question is that if tariff increases from India, will they still do business with China, it is difficult to say right now.

 

However, Professor Huang Yung Song of the School of International Studies at Sichuan University in China, says the first six months of the year prove that the economy has its own pace despite the epidemic.

 

According to him, the trade has declined due to the epidemic but it is a matter of time. He says, "The statistics also prove that attempts to separate the economies of the two stalwarts of Asia have failed. This is the need of the 21st century."

 

India's exports increased

Explaining the reason for the increase in Indian exports to China in the last three months, economic experts say that the main reason is the rapid export of cast iron to China which is many times more than in the previous year.

 

According to China's customs data, the shipment of cast iron from India has increased to 20 million tonnes from January to June this year. In the entire 12 months of the year 2019, it was only 8 million tonnes.

 

China is increasing the production of steel to revive its economy, for which it needs India's cast iron and is importing these goods from India as well as Australia.

 

Apart from banning about 60 Chinese applications, the Indian government has taken some steps to reduce the influx of Chinese goods since the Galvan encounter on 15 June.

 

India's Directorate General of Foreign Trade (DGFT) announced a ban on the import of color television sets two weeks ago to encourage local manufacturing.

 

DGFT said in a notification, "The import of color TV has been restructured from free".

 

To keep an item in the rectified form of import means that a license has to be obtained from the DGFT Department of Commerce Ministry for import of that item.

 

Will dependence on China decrease?

 

The Indian government, especially since the relationship with China has deteriorated, has started emphasizing self-reliance. But it seems that this attempt is to reduce dependence on Chinese goods.

 

Deepak Chopra, a trader of Chinese goods in Delhi, asks, where will self-sufficiency come from banning Chinese color TV?

 

They say that they have been using high-end Chinese TV for the last five years, which they bought for 40 thousand rupees, the same level Sony or LG TV will come for one lakh rupees.

 

Chopra says, "The loss will only be the consumers".

 

Chopra says, "The loss will only be the consumers".

 

Dr. Faisal Ahmed says that self-reliance does not mean the end of dependency between countries.

 

Professor Huang also does not consider efforts to stop the influx of Chinese goods in India in the interest of both countries.

 

They say, "This will never be in the interests of China or India. External forces are using the strategy of" divide and rule "in the two big countries of Asia. The Chinese are very sad to see that India Is playing in the hands of the forces. "

 

Every country in the world tries its best to reduce the cost of its product. Countries are not completely dependent on imports and exports.

 

Every country strives to be self-sufficient in various fields by focusing on low-cost production and value chain. And they should do so because it is in their financial interest.

 

Countries do not want to depend on any particular country, so all trade partners of India including China and ASEAN countries must understand that self-reliance does not mean that India's economic dependence at the international level will end.

 

Dr. Faisal Ahmed believes that borderline differences can affect economic and business relationships. According to him, it will be correctly guessed after three months.

 

His advice to China was, "It is imperative that China takes a step forward to control its geopolitical ambitions, and help create a win-win situation for the Make in India as well as Made in China 2025 programs" do."