Double-digit rise in exports helps India nearly halve trade gap with China

by Zhao Xinhua

Indias robust double-digit exports growth to China， coupled with sharp contraction in imports， nearly halved the trade gap between the two trading partners in the first five months of the current fiscal year （2020 - 21， or FY21） over the same period of 2019 - 20 （FY20）.

The restriction on imports from China has shrunk Indias trade deficit with the neighbouring country to $12.6 billion between April and August of FY21， from $22.6 billion in the year-ago period.

Indias trade deficit with China stood at $23.5 billion in the corresponding period of 2018 - 19 and at $26.33 billion in 2017 - 18.

India exports to China saw sustained double-digit growth for the fourth straight month in August， led by eightfold rise in iron and steel shipments. In the April -August period， outbound shipments to Beijing expanded 27 per cent， compared to 9.5-percent expansion in the same period last year.

In the first five months of this year， Indias imports from China fell by 27% to $21.5 billion， a 21% drop in August alone.

Indias exports to China grew 15 per cent in August， with shipments worth $1.68 billion， revealed the data by the Department of Commerce. Exports growth to Beijing peaked in June at 78 percent and expanded 48 percent in May and 23 percent in July.

Indias exports basket to China mainly accounted for iron and steel， which rose 833 percent to $1.8 billion till August this year， compared with $192 million last year. China accounted for 35 percent of Indias iron and steel outbound shipments in the first five months of the fiscal year， against 5.3 percent in the corresponding period last year.

China also made up for 90 percent of Indias exports of iron ore worth$1.6 billion， a fourth of exports of organic chemicals worth $809 million， and 16 percent of exports of marine products worth $351 million during the five months.

The import basket is largely dominated by telecom instruments， organic chemicals， and industrial equipment for dairy， etc.

Among Indias top five export partners， China is the only destination showing growth. Exports to the U.S. are down 24.6 percent. In the case of UAE， they are down 59.2 percent. Shipments to Singapore also contracted 24.2 percent and 26.7 percent， respectively.