Air Freight News

China back as top India trade partner even as relations sour

China regained its position as India’s top trade partner in 2020, as New Delhi’s reliance on imported machines outweighed its efforts to curb commerce with Beijing after a bloody border conflict.

Two-way trade between the longstanding economic and strategic rivals stood at $77.7 billion last year, according to provisional data from India’s commerce ministry. Although that was lower than the previous year’s $85.5 billion total, it was enough to make China the largest commercial partner displacing the U.S.—bilateral trade with whom came in at $75.9 billion amid muted demand for goods in the middle of a pandemic.

While Prime Minister Narendra Modi banned hundreds of Chinese apps, slowed approvals for investments from the neighbor and called for self-reliance after a deadly clash along their disputed Himalayan border, India continues to rely heavily on Chinese-made heavy machinery, telecom equipment and home appliances. As a result, the bilateral trade gap with China was at almost $40 billion in 2020, making it India’s largest.

Total imports from China at $58.7 billion were more than India’s combined purchases from the U.S. and the U.A.E, which are its second- and third-largest trade partners, respectively. Heavy machinery imports accounted for 51% of India’s purchases from its neighbor.

That said, India did manage to lower imports from its Asian neighbor amid demand disruptions caused by the coronavirus pandemic. The South Asian nation also managed to increase its exports to China by about 11% from a year ago to $19 billion last year, which makes any further worsening of ties with Beijing a threat to New Delhi’s export revenue.

The tense relations are already weighing on India’s ambitions to bolster its manufacturing capabilities. New Delhi has been slow to issue visas to Chinese engineers needed to help Taiwanese companies set up factories under a so-called production-linked incentive program, or PLI, to promote local manufacturing.

“Still a very long way to go” is how Amitendu Palit, an economist specializing in international trade and investment at the National University of Singapore, described New Delhi’s efforts to wean itself away from Beijing. “The PLI schemes will take at least four-five years to create fresh capacities in specific sectors. Till then reliance on China would continue.”

Bloomberg
Bloomberg

© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

Similar Stories

https://www.ajot.com/images/uploads/article/port-of-la-evergreen.jpg
U.S. retailers see millions in sales delays amid shipping logjam
View Article
NHLA: China to extend tariff exclusions through September 16, 2021

This morning, NHLA received word from our friends at the American Hardwood Export Council that the Chinese Government has extended the tariff exclusions for many U.S. products, including hardwood lumber…

View Article
Europe’s largest iron ore producer LKAB picks Konecranes for Service technology, polar precision

Konecranes has won a multi-year Service contract with international mining and minerals group LKAB for the maintenance of some 1,600 assets across four sites in northern Sweden and the Arctic…

View Article
Soybean growers approve 2021 resolutions

Members of the American Soybean Association (ASA) have completed the organization’s annual resolutions process to set the tone and direction for policy advocacy in the weeks and months ahead.

View Article
EU and U.K. nearing first, small step for post-Brexit finance

Britain and the European Union are nearing agreement on how to cooperate on financial market rules -- a first, limited step toward working together after Brexit.

View Article
https://www.ajot.com/images/uploads/article/eu-flag-blue-sky.jpg
EU begins probe into whether to prolong steel-import quotas
View Article