Finance Minister Nirmala Sitharaman on Friday used a ‘pair of scissors’ analogy to explain India’s trade deficit with China and ways to amend the imbalance.
In an exclusive interview with Rahul Joshi, Group Editor-in-Chief, Network18, Sitharaman — when asked about the deficit hitting $100 billion in 2022 — said no country wanted imports to rise with any partner.
“No country would want exports to languish and imports to balloon with any trading partner but the issue has a two-pronged answer. One, we have to be conscious that everything is not consumed from one destination and second, India’s export market should be expanded in that territory. So you see, it is always a twin game, like a pair of scissors, you have to look at both the sides,” the finance minister said.
In a first, despite tensions between the countries since the Galwan clash in 2020, India’s trade deficit with China crossed the $100 billion mark, while total bilateral goods trade with China reached a record level of $135.98 billion in the calendar year 2022, overtaking the $125 billion mark reached in 2021.
According to a brief on trade posted on the Indian Embassy website in Beijing, “The rapid expansion of India-China bilateral trade since the beginning of this century has propelled China to emerge as India’s largest goods trading partner by 2008.”
“Since the beginning of the last decade, bilateral trade between the two countries recorded exponential growth. From 2015 to 2021, India-China bilateral trade grew by 75.30%, an average yearly growth of 12.55%”, the note said.
In an analysis in 2022, the Indian Express had reported that the top commodities that India bought were “electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers and parts; nuclear reactors, boilers, machinery and mechanical appliances and parts of thereof; organic chemicals; plastic and plastic articles; and fertilisers.”
Meanwhile, the top commodities that China bought from India were ores, slag and ash; organic chemicals, mineral fuels, mineral oils and products of their distillation, bituminous substances, mineral waxes; iron and steel; aluminium and articles of thereof; and cotton.
While many have expressed concern over the imports from the neighbour, several experts suggest that India being flooded with more electronic components, computer hardware, peripherals shows the move towards a technological revolution. It could also be viewed as a sign that the manufacturing sector is coming back on track and demands are on the rise.
Meanwhile, the finance minister on Friday also said that the way in which inflation has come down should sustain and it’s not momentary or a one-month affair.
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