Commercial and Economic Relations

The trade and rconomic relationship between India and China has seen a rapid growth in the last few years. Trade volume between the two countries in the beginning of the century, year 2000, stood at US$ 3 billion. In 2008, bilateral trade reached US$ 51.8 billion with China replacing the United States as India’s largest “Goods trading partner.” In 2011 bilateral trade reached an all-time high of US$ 73.9 billion.

Current State of Play

• According to recently released data by Chinese Customs, India-China trade in 2016 decreased by 0.67% year-on-year to US$ 71.18 billion. India’s exports to China decreased by 12.29% year-on-year to US$ 11.748 billion while India’s imports from China saw a year-on-year growth of 2.01% to US$ 59.428 billion.
• The Indian trade deficit with China further increased by 6.28% year-on-year to US$ 47.68 billion. In 2016, India was the 7th largest export destination for Chinese products, and the 27th largest exporter to China.
• India-China trade in the first eight months of 2017 increased by 18.34% year-on-year to US$ 55.11 billion. India’s exports to China increased by 40.69% year-on-year to US$ 10.60 billion while India’s imports from China saw a year-on-year growth of 14.02 % to US$ 44.50 billion. The Indian trade deficit with China further increased by 7.64% year-on-year to US$ 33.90 billion.

Composition of Bilateral Trade

• In 2016, India’s top exports to China included diamonds, cotton yarn, iron ore, copper and organic chemicals. Indian exports of diamonds grew 28.48% and amounted to US$ 2.47 billion. India was the second largest exporter of diamonds (worked/not worked) to China (with a share of 31.81%). India’s cotton (including yarn and woven fabric) exports to China showed a decline of 44.1% to reach US$ 1.27 billion, although India was the second largest exporter of cotton to China with 16.43% market share. In 2016, Indian exports of iron ore registered an increase of over 700% to reach US$ 844 million.
• In 2016, China exports of electrical machinery and equipment saw an increase of 26.83% to US$ 16.98 billion. India was the largest export destination of Fertilizers exports from China. China exported 23.48% of its total Fertilizers (worth US$ 1.54 billion) to India.
• India was the largest export destination for Chinese Antibiotics worth US$ 711 million in 2016, with a share of 23.55%. India was the second largest export destination for Chinese organic chemicals, worth US$ 5.68 billion in 2016.
• Seven Indian Banks have a branch of representative office in China. Chinese bank, ICBC has one branch in India in Mumbai. According to data released by China’s Ministry of Commerce, the Chinese investment in India in Jan-Mar 2017 were to the tune of US$ 73 million. Cumulative Investment in India till March 2017 stood at US$ 4.91 billion.
• The cumulative Indian investment in China till March 2017 reached US$ 705 million. More recently, in April 2017, e-business visa has been introduced to encourage more number of business people from China travelling to India.