Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

India-China Bilateral Trade Hit a new record in 2023: Chinese Envoy

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NA

Mains level : India's over-dependence on Chinese imports

china

Introduction

  • Bilateral trade between India and China soared to a record $136.2 billion in 2023, marking a 1.5% year-on-year increase.

Why discuss this?

  • Trade Deficit Concerns: India has been grappling with a significant trade deficit in favor of China, exceeding $100 billion in 2022. Efforts to address this deficit remain a priority for India.
  • Diplomatic Vacancies: The absence of a Chinese Ambassador to Delhi for over 16 months and the lack of direct flights between the two countries underscore persistent diplomatic challenges.
  • Panchsheel Agreement Anniversary: The upcoming 70th anniversary of the India-China Panchsheel Agreement serves as a reminder of the importance of peaceful coexistence and adherence to international norms.

India-China Bilateral Trade Overview

  • Key Trading Partner: China stands as India’s largest trading partner, with significant exchanges in various commodities.
  • Major Imports from China: Electronic equipment, machinery, organic chemicals, and iron and steel are among the primary commodities imported from China into India.
  • Major Exports to China: Indian exports to China include cotton, gems, copper, ores, organic chemicals, and machinery.

Recent Measures to Curb Imports from China

  • Boycotts and Labeling Initiatives: Indian businesses are increasingly boycotting Chinese products, while the government mandates country of origin labelling for products sold online.
  • Ban on Chinese Apps: The Indian government has banned several Chinese mobile applications, citing concerns over national security and data privacy.

Challenges and Implications of Complete Boycott

  • Trade Deficits and Economic Realities: Complete boycotts may not be feasible as they could adversely affect Indian consumers, producers, and exporters.
  • Impact on Pharma Sector: The pharmaceutical sector, heavily reliant on Chinese imports for raw materials, could face significant disruptions.
  • Minimal Impact on China: UNCTAD data suggests that a complete boycott would have limited repercussions on China’s economy.
  • Integration and Policy Credibility: India’s integration with China and the potential fallout on policy credibility are crucial considerations.

Way Forward

  • Promoting Self-Reliance: India’s focus on self-reliance aims to bolster domestic capabilities and enhance competitiveness in global trade.
  • Government Support and Ecosystem Development: Government initiatives under the “Atmanirbhar” banner should prioritize industries needing support for self-reliance.
  • Addressing Cost Disadvantages: Long-term strategies must address the cost disparities in Indian manufacturing to reduce dependence on imports.
  • Conflict Resolution: Continued efforts towards conflict resolution and adherence to international norms will be crucial in navigating the complexities of this strategic partnership.

Back2Basics: Panchsheel Agreement

Details
Origin
  • Joint statement issued by PM Nehru during Chinese premier Zhou Enlai’s visits to India in 1954
  • Based on Westphalian norms of State Sovereignty
Principles
  1. Mutual respect for sovereignty and territorial integrity
  2. Mutual non-aggression
  3. Mutual non-interference in internal matters
  4. Equality and mutual benefit
  5. Peaceful co-existence
Relevance
  • Preserving independence, sovereignty, and territorial integrity
  • Reducing regional tensions and threats
  • Establishing India as an equal partner
  • Providing a framework for engagement
  • Portraying India as a robust democracy
  • Facilitating regional cooperation and connectivity

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