When it comes to global trade, China is India’s largest trading partner and its seventh largest export destination. In 2014, trade between India and China was valued at US$ 70.25 billion.
Given the strong bilateral trade relations between the two Asian nations, it does come as a surprise that India has levied a ban on import of several goods from China. These include milk and milk products, specific mobile phones and a few other items such as steel products. The reason being the goods were of poor quality and were not adhering to security codes.
Commerce Minister Nirmala Sitharaman spoke about the ban in the Lok Sabha stating that poor quality of milk and milk products imported from China was unacceptable.
The reason mobile phones were banned she said was because they failed to carry international mobile equipment identity number or other security features.
While the govt. is yet to make known how long the ban is going to last, the opposition has been demanding for a blanket ban on imports of products from China.
“China has completely smashed the Indian Micro, Small and Medium Enterprises (MSME) sector, but the India government has been giving out the message: Please come and trample upon us”, Biju Janata Dal (BJD) member Tathaghata Satpathy said. Several other members of the opposition echoed his sentiments.
Nirmala Sitharaman was quick to shoot down the suggestion as a complete ban on Chinese products was not possible as per the rules laid down by WTO. “This is regardless of problems India may have with any country at the political, diplomatic or military levels,” she said.
Another cause of concern about the bilateral trade between India and China is the growing trade deficit. India’s trade deficit with China stood at $48.68 billion during 2015-16 (April-February) and the total bilateral trade was $65.16 billion during the period.
||Exports to China
||Imports from China
Source: Directorate General of Commercial Intelligence and Statistics (In USD billion)
“Increasing trade deficit with China can be attributed primarily to the fact that Chinese exports to India rely strongly on manufactured items to meet the demand of fast expanding sectors like telecom and power, while India’s exports to China are characterised by primarily and intermediate products,” she said.