China continued to be India’s top source of imports in the financial year ended March 31, with shipments growing 4.16 percent to $98.51 billion, although its share of inbound shipments narrowed.
India's trade deficit with China widened in FY23, led by the rise in imports and a fall in exports, data released by the commerce ministry showed. India’s exports to China declined 28 percent to $15.3 billion. The trade deficit widened to $77.6 billion from $72.9 billion in FY22.
The data comes amid persistent concerns over reliance on China for key raw materials and inputs. India started a slew of production-linked incentive schemes to boost domestic manufacturing and attract foreign investment as countries seek to cut dependence on the world’s second-largest economy.
Pandemic-led supply chain disruptions and the US-China trade and geopolitical war made a case for India as an attractive investment destination. Border tensions between India and China had led to calls to lower trade relations.
Still, the government was realistic about trade with the larger neighbour.
“Even though we are making in India, we cannot make every little component on our own and need to import,” an official said, asking not to be identified. “We are one of the fastest-growing economies with consumption constantly increasing. The growth of our economy will reflect in our imports, too.”
China’s import share declines
Even though imports have risen in absolute numbers, China’s share in India’s imports narrowed to 13.79 percent in FY23 from 15.43 percent a year ago. This was because fertilisers and electronic goods started coming in from other countries, the official said.
“We are working on reducing our dependence on China. We are also working on diversification of our imports basket so import dependence from particular countries can decline,” the official added.
The UAE and the US were in second and third places, respectively, with shares of 7.45 percent and 7.03 percent in India’s import basket.
| India's top 5 merchandise import source countries in FY 2022-23 | ||||||
| Nations | Apr 2021-Mar 2022Share % | Apr 2022- Mar 2023Share % | USD BillionApr 21- Mar 22 | USD BillionApr 2021- Mar 2022 | Growth % | |
| China | 15.43 | 13.79 | 94.57 | 98.51 | 4.16 | |
| UAE | 7.31 | 7.45 | 44.83 | 53.24 | 18.75 | |
| USA | 7.07 | 7.03 | 43.31 | 50.24 | 15.98 | |
| Russia | 1.61 | 6.49 | 9.87 | 46.33 | 396.44 | |
| Saudi Arab | 5.56 | 5.89 | 34.10 | 42.05 | 23.31 | |
| Source: Commerce Ministry |
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