Recent trend in commodity trade between India and China

Exports from India to China were down 30 per cent year-on-year in the first half of the year 2012-13, according to China Import Data, thus resulting in further widening of trade imbalance between the two countries in the favor of China .The trade deficit which stood at $1.08 billion in year 2001-02 has crossed $40 billion mark in year 2012-13.

The bilateral trade has declined by 7.2 % after the first six months of the year 2012-13 to $31.68 billion and stood at around 67.83 billion USD. Primary reason is the decrease in Indian exports to China which mainly comprised iron ore and cotton, fuelling the downfall.

Indian imports from China would cross $57 billion in fiscal 2012-13 according to China Export Data but the Exports to china may not exceed 14 billion USD. China has the largest share of 11 percent in the total Indian imports of merchandise. The major products imported from China are Machinery, electronics and precious pearls.  Major products exported to China are transport equipments, petroleum products, machinery, drugs & Pharceuticals.

As a part of Chinese Premier Li Keqiang’s recent visit to India, a series of memorandum of understandings have been signed between the two countries. MOU’s were signed on pharmaceuticals, buffalo meat and fisheries. India anticipates bridging the trade deficit as a result of singing these Mou’s in its favor as there were trade barriers in exports of drugs and pharmaceuticals to China. Even buffalo meat was not allowed to be exported from India to China till now.

The recent series of weakening of rupee would also have a deep impact on the widening the current account deficit of India as Indian imports would become dearer. China on other hand will be happy with its depreciating currency as it exports more than it Imports. Depreciating Chinese currency makes its goods cheaper in the international market.

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