China has overtaken the US to become India’s top trading partner in the fiscal year 2023-2024, achieving a bilateral trade value of $118.4 billion, slightly surpassing the US, which stood at $118.3 billion. Several factors contributed to this shift:
Increase in Imports from China: India’s imports from China rose by 3.24% to $101.7 billion. These imports included significant quantities of telecommunications equipment, smartphone parts, and other electronics, which are crucial for India's growing tech and manufacturing sectors (Business Standard) (ChinaPulse.com).
Growth in Exports to China: India’s exports to China grew by 8.7% to $16.67 billion. Key export sectors included iron ore, cotton yarn, handloom products, spices, fruits, vegetables, and plastics (Business Standard) (mint).
Decline in Trade with the US: India's exports to the US dropped by 1.32% to $77.5 billion, while imports from the US fell by about 20% to $40.8 billion. This decline was attributed to various factors, including changes in demand and economic conditions in both countries (Business Standard) (mint).
India's Dependence on Chinese Goods: Despite efforts to reduce reliance on Chinese imports through production-linked incentives and anti-dumping duties, India continues to import significant quantities of essential goods from China. These include electronics, pharmaceuticals, and components for electric vehicles .
Historical Trade Patterns: Over the past five years, India’s trade with China has seen a robust increase from around $80 billion to $118.4 billion, indicating strong and growing economic ties despite geopolitical tensions .
This complex interplay of increased imports, strategic economic dependencies, and shifting trade dynamics has enabled China to regain its position as India’s largest trading partner.
