Recent data from the Global Trade Research Institute reveals that China has dethroned the United States to become India’s largest trading partner. The two nations exchanged goods and services worth $118.4 billion during the fiscal period of 2023-24, slightly more than the $118.3 billion recorded between India and the US.
Dynamics of India-China Trade
India’s export sector to China grew robustly, with an increase of 8.7%, culminating in $16.67 billion. Key growth sectors included iron ore, cotton yarn, fabrics, handlooms, and agricultural products such as spices and vegetables. On the other side, China’s exports to India rose by 3.24%, resulting in imports worth $101.7 billion for India. This rise in imports swelled India’s trade deficit with China from $53.57 billion in FY2019 to $85.09 billion in FY2024, casting shadows over the stagnant export figures in the face of escalating imports.
Contrasts with the United States
Trade figures with the United States tell a different tale. Indian exports fell slightly by 1.32% to $77.5 billion, while imports from the US decreased significantly by 20% to $40.8 billion. This decrease in imports, juxtaposed with a substantial increase in exports, expanded India’s trade surplus with the US.
Wider Trade Relationships
GTRI’s analysis indicates significant transformations in India’s relationships with its top 15 trading partners from FY 2019 to FY 2024, reshaping import and export flows and impacting the trade balance across sectors. Notably, China was the predominant trading partner for India from 2013-14 until 2017-18 and in 2020-21, with the UAE and the US intermittently leading in other years.
In 2023-24, the UAE followed China and the US as India’s third-largest trading partner, achieving trade volumes of $83.6 billion. Russia, Saudi Arabia, and Singapore were also significant, underscoring the breadth of India’s international trade engagements.
Strategic Implications
The reestablishment of China as India’s premier trading partner underscores the dynamics of international trade. As global economic alliances continue to evolve, India’s strategic trade decisions will influence its standing on the world stage and its economic trajectory in the coming years.
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