Wallets To Stop Bullets

An imbalance exists, but Sino-Indian trade ties are too entwined to allow a conflict

- Arindam Mukherjee

DESPITE the unresolved border issue, disputes over territory and, most recently, lingering tension over the impasse at Doklam, China continues to be one of India’s largest trading and business partners. In the last few years, trade between India and China have leapfrogged—official data puts it as worth about $75 billion.

Yet, concernedly, India has a huge trade deficit with China, which means our imports from China far exceeds our exports to it. According to data from the Union Ministry of Commerce, India imported goods worth $61.3 billion from China in 2016-17. During the same year, India’s exports to China were worth just $10.2 billion—a trade deficit of $51.1 billion in China’s favour. Among China’s top trade partners, its trade surplus with India is second after the US. But more importantly, that deficit has been increasing and now accounts for nearly half (47 per cent) of India’s total trade deficit.

The ongoing border crisis has raised fears of a confrontation between India and China and, consequently, the fate of business and trade ties. If a conflict does break out, China will have a big market to lose; given its humongous trade surplus, the Indian market matters hugely to it. A lot of Chinese ancillary and small-scale industries also fully rely on the Indian market.