India reaching an agreement with China on patrolling along the LAC in eastern Ladakh is a positive development as it would further create a friendly environment for trade ties between the two countries, say exporters.
They added that the move would also provide comfort to Indian businessmen doing business with China.
“Present disengagement will give mental comfort to Indian businessmen doing business with China. The Department of Commerce should identify 10 top imports from China and work on them to cut the imports,” Mumbai-based exporter and CMD Technocraft Industries Saran Kumar Saraf said. He has a unit in China.
India on Monday announced it has reached an agreement with China on patrolling along the Line of Actual Control (LAC) in eastern Ladakh. This is seen as a major breakthrough in ending the over four-year-long military standoff ahead of a likely meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping in Russia this week.
Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said that it is too early to draw any precise conclusion on its effect on trade but such developments will be positive in creating a more congenial environment for businesses and getting better market access for Indian agri, pharma and IT exports.
“We should look forward to a more balanced trade,” Sahai said.
India has one of the highest trade deficits with China, which stood at $ 85 billion in 2023-24. India’s exports stood at $ 16.65 billion, while imports were $ 101.73 billion in the last fiscal.
India has time and again raised concerns over this widening trade gap and has asked China to provide greater market access for its goods.
China has emerged as India’s top import source with $ 56.29 billion worth of inbound shipments during the April-September period of this fiscal, according to the commerce ministry data.
The imports from China rose by 11.5 per cent during the first half of this fiscal. The imports stood at $ 50.48 billion during April-September 2023.
During the period, the top 10 import sources of India were China, Russia, the UAE, the US, Iraq, Saudi Arabia, Indonesia, Korea, Switzerland and Singapore, the data showed.
The top 10 export destinations of the country during the period were the US, the UAE, the Netherlands, the UK, China, Singapore, Saudi Arabia, Bangladesh , Germany and South Africa.
Similarly, exports to China increased to $ 6.91 billion from $ 7.63 billion in the first half of the last fiscal. In 2023-24, the US was India’s largest trading partner, followed by China.
China was India’s top trading partner from 2013-14 till 2017-18 and in 2020-21. Before China, the UAE was the country’s largest trading partner. The US was also the largest partner in 2021-22 and 2022-23.
The pre-budget Economic Survey on July 22 suggested that instead of importing goods, focusing on FDI from China seems more promising.
China stands at the 22nd position with only 0.37 per cent share ($ 2.5 billion) in the total FDI equity inflow reported in India from April 2000 to March 2024. FDI from countries sharing land borders with India like China have to mandatorily seek government approval for all sectors. This policy was issued in April 2020.
