Trade between India and China

Trade relations between India and China began at a slow pace with an annual turnover of only a few million dollars. The scenario changed after India and China signed the Most Favoured Nation Agreement in 1984. Indo-China bilateral trade kept increasing after that. Trade volume which was just US $ 1.8 billion in 1999-2000 increased to US $ 63 billion in 2010-11. (Source: Ministry of Commerce and Industry) In 2008, China became India’s largest goods trading partner, replacing the United States of America. However, the balance of trade is heavily tilted in favour of China. India's trade deficit with China was US $ 23 billion in 2010-11 and it is estimated to reach $60 billion by 2014-15.

Government of India has been addressing the issue of growing trade deficit at the highest level. At the Ministerial level, there is the India-China Joint Group on Economic Relations, Trade, Science and Technology (JEG) where trade related issues are taken up regularly. The Eighth Session of India-China JEG was held on 19th January, 2010 in Beijing. As an outcome of 8th JEG a Memorandum of Understanding on extension of Trade and Economic Cooperation was signed. The MoU recognises that a balanced trade is conducive to long term, sustainable and harmonious development of economic cooperation between the two countries. Indian exporters are encouraged to participate in major trade fairs in China to show-case Indian products in the Chinese market and increase engagement with Chinese companies. Participation of Indian exporters in trade fairs aims to promote Indian products amongst Chinese importers. With a view to reducing trade deficit, efforts are also being made to diversify the trade basket with emphasis on manufactured goods.

Volume of Trade between India and China
Values in US $ Millions

  2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
EXPORT 8,321.86 10,871.34 9,353.50 11,617.88 19,615.85
%Growth   30.64 -13.96 24.21 68.8
India's Total Export 126,414.05 163,132.18 185,295.36 178,751.43 251,135.89
%Growth   29.05 13.59 -3.53 40.49
%Share   6.66 5.05 6.5 7.81
IMPORT 17,475.03 27,146.41 32,497.02 30,824.02 43,479.76
%Growth   55.34 19.71 -5.15 41.06
India's Total Export 185,735.24 251,654.01 303,696.31 288,372.88 369,769.13
%Growth   35.49 20.68 -5.05 28.23
%Share 9.41 10.79 10.7 10.69 11.76
TOTAL TRADE 25,796.89 38,017.74 41,850.52 42,441.90 63,095.61
%Growth   47.37 10.08 1.41 48.66
India's Total Trade 312,149.29 414,786.19 488,991.67 467,124.31 620,905.02
%Growth   32.88 17.89 -4.47 32.92
%Share 8.26 9.17 8.56 9.09 10.16
TRADE BALANCE          
India's Trade Balance -59,321.19 -88,521.83 -118,400.95 -109,621.45 -118,633.24

Source: Ministry of Commerce and Industry, Dated: 15/06/2012

Priority List of Imports by India from China

  • Electrical Machinery
  • Machinery
  • Plastic
  • Organic and Inorganic Chemicals
  • Iron and Steel, Iron/Steel Products
  • Rare Earth Metals
  • Fertilizers
  • Impregnated Text Fabrics
  • Manmade Filament, Fabric
  • Silk; Silk Yarn, Fabric
  • Vehicles
  • Mineral Fuel, Oil Etc
  • Aluminum

Priority List of Imports by China from India

  • Machinery
  • Plastic
  • Ores, Slag, Ash
  • Metals
  • Organic Chemicals Salt; Sulphur; Earth, Stone
  • Inorganic Chemicals; Rare Earth Metals
  • Cotton and Yarn, Fabric
  • Copper and Articles Thereof
  • Electrical Machinery
  • Hides and Skins
  • Artificial Flowers, Feathers
  • Tanning, Dye, Paint, Putty
  • Precious Stones
  • Fish and Seafood

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