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China’s Growing Share in India’s Industrial Goods Imports: Implications and Recommendations

China's Growing Share in India's Industrial Goods Imports: Implications and Recommendations

The increasing reliance of India on Chinese industrial goods presents significant economic and security concerns, with China’s share in New Delhi’s imports rising from 21% to 30% over the last 15 years. This situation demands a strategic reassessment of import strategies to foster diversified and resilient supply chains.

Report Highlights

Trade Deficit Concerns

India’s trade deficit with China has surged over the past five years, exceeding $387 billion.
India’s exports to China have remained stagnant at $16 billion annually, while imports from China have risen to over $101 billion in 2023-24.

Import Dependency Dynamics

China’s share in India’s industrial product imports has grown significantly, now accounting for 30% compared to 21% fifteen years ago.
China’s exports to India have grown 2.3 times faster than India’s total imports from other countries.

Sectoral Dependency

Key sectors witnessing a substantial rise in import dependency include electronics, telecom, machinery, chemicals, pharmaceuticals, iron, steel, base metals, plastics, textiles, automobiles, medical equipment, leather, paper, glass, ships, and aircraft.

Specific Sectoral Import Trends

Electronics, telecom, and electrical products sector recorded the highest import value, with China contributing 38.4%.
Machinery imports from China constitute 39.6% of India’s total imports in the sector.
China’s share in India’s chemical and pharmaceutical imports stands at 29.2%.
Plastics and related articles imports from China account for 25.8% of India’s total imports in this sector.

Need for Strategic Action

Urgent focus on research and development in capital goods and machinery sectors.
Upgrading industries related to intermediate goods like organic chemicals, APIs, and plastics.
Exploring domestic production potential for products currently imported from China, particularly in categories dominated by micro, small, and medium enterprises (MSMEs).

Piyush Shukla