From UPSC perspective, the following things are important :
Prelims level : NA
Mains level : India's over-dependence on Chinese imports
- 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.
- 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