Chart of the Day | India’s exploding trade deficit with China

Representative Image

The accompanying chart shows how India’s trade deficit with China has gone up by leaps and bounds. The deficit went up from less than a billion dollars in 2001 to a massive $63 billion in 2017-18. Between 2013-14 and 2017-18, the deficit went up almost 75 percent.

Imports from China accounted for around three percent of total imports in 2000-01, but it expanded to 16.4 percent of total imports in 2017-18. In FY18, China accounted for 39 percent of our overall trade deficit.

The government has taken some steps such as imposing anti-dumping duties and talking with the Chinese government to increase our exports. These measures have helped a bit and India’s trade deficit with China in the first nine months of the current fiscal has been slightly lower at $41 billion, as the chart shows.

The problem is not just China -- the question is: why have our non-POL (petroleum, oil and lubricants) merchandise exports fallen from 14.4 percent of GDP in the September 2011 quarter to 10.2 percent of GDP in the December 2018 quarter? It’s a clear indication of the lack of competitiveness of much of Indian industry.