FM Sitharaman on trade deficit with China: You have to look at both sides

FM Nirmala Sitharaman breaks Budget 2023 down in an exclusive interview with Network18.

The domestic response to India’s widening trade deficit with China must be a nuanced and two-pronged one, Finance Minister Nirmala Sitharaman has said.

“No country would want its exports to languish and imports to balloon with any trading partner,” the minister said in an exclusive interview to Network 18 on February 3. She was responding to a question if the widening trade gap was acceptable.

“But the issue has two-pronged answers. We should be conscious not to have to consume things which come overly from only one destination but that doesn’t mean that I am imposing any view,” the minister said

The export market has to be expanded in “that territory” or in any other geographical jurisdiction, she added. “It is always a twin game. It is like a pair of scissors; you have to look at both sides,” Sitharaman said.

India’s trade deficit with its larger neighbour breached $100 billion in 2022.

The countries had military scuffles at the line of actual control in December 2022, bringing the spotlight on the wide trade deficit.

China is India’s second biggest trading partner after the US. It was the largest trading partner in fiscal years 2013-14 to 2017-18 and again in 2020-21, data from the commerce ministry shows.