Trade gap between India and China continues to widen

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Status of India- China Trade
- India's exports to China increased from $15.33 billion in FY23 to $16.67 billion in FY24.
  - Key items exported to China include iron ore, cotton yarn, cotton, quartz, etc.
- India’s imports from China rose from $98.51 billion in FY23 to $101.75 billion in FY24, widening trade deficit by to $85.08 billion in FY 24 (i.e. 2.3%).
  - Key items imported from China include plastics, steel products, fertilizers etc.

Reasons for increasing Trade Deficit
- Narrow basket of commodities, mainly raw material and minerals are exported, from India to China.
- Increased imports of material for solar energy, electric vehicles etc. due to focus on renewable energy and carbon neutrality.
- Growth of manufacturing units in India has led to increased raw material imports from China.
- Preference of firms in sourcing supplies from China due to less cost.

Measures taken by India
- Production-Linked Incentive scheme to make Indian manufacturers globally competitive, attract investment, promote exports.
- Expanding India’s trade partners by signing and negotiating trade facilitation agreements with European Union, Canada etc.

Way ahead
- Explore alternative sources of imports from the ASEAN countries.
- Boosting India's domestic manufacturing base and exports.