The landscape of India’s trade partnerships has shifted! In a surprising turn of events, China has edged past the United States to become India’s largest trading partner for the 2023-24 fiscal year (FY24).
According to data from the economic think tank GTRI, bilateral trade between India and China reached a staggering USD 118.4 billion, narrowly surpassing the USD 118.3 billion in trade with the US. This development marks a significant change, as the US held the top spot for the previous two fiscal years.
Economic think tank GTRI data shows that, with USD 118.4 billion in two-way trade in 2023–24, China has become India’s largest trading partner, marginally surpassing the US.
China Reclaims Top Spot as India’s Biggest Trading Partner in FY24
In 2023–24, the value of bilateral trade between the US and India was USD 118.3 billion. Throughout 2021–2022 and 2022–2023 Washington was New Delhi’s principal trading partner.
According to the report, India’s exports to China increased by 8.7% to USD 16.67 billion during the most recent fiscal year. The primary industries with robust growth in exports to that nation include iron ore, plastic, linoleum, spices, cotton yarn/fabrics/makeups, handloom products, fruits and vegetables, and spices.
Imports from the neighboring country increased by 3.24 per cent to USD 101.7 billion. On the other hand, exports to the US dipped by 1.32 per cent to USD 77.5 billion in 2023-24 as against USD 78.54 billion in 2022-23, while imports dipped by about 20 per cent to USD 40.8 billion, the data showed.
According to the Global Trade Research Initiative, there were notable changes in India’s trade dynamics with its top 15 trading partners between the fiscal years 2019 and 2024. These changes affected both imports and exports, as well as the country’s trade surplus or deficit in different sectors.
It added that China witnessed a marginal decline in exports by 0.6 per cent, from USD 16.75 billion to USD 16.66 billion, while imports from China surged by 44.7 per cent, from USD 70.32 billion to USD 101.75 billion.
“This growth in imports led to an expanding trade deficit, rising from USD 53.57 billion in FY2019 to USD 85.09 billion in FY2024, highlighting concerns over stagnant exports amidst rising imports,” GTRI Founder Ajay Srivastava said.
Conversely, it said, trade with the US showed growth, with exports increasing significantly by 47.9 per cent from USD 52.41 billion to USD 77.52 billion.
Additionally, US imports increased by 14.7%, from USD 35.55 billion to USD 40.78 billion. India’s trade surplus increased as a result, rising from USD 16.86 billion to USD 36.74 billion.
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China ranked first among India’s trading partners in 2020–21 and from 2013–14 to 2017–18, according to data from the commerce ministry. The UAE was the nation’s top trading partner before to China. In both 2022–2023 and 2022–2023, the US constituted the largest partner.
With USD 83.6 billion, the UAE ranked as India’s third-largest trading partner in 2023–2024. Singapore, Saudi Arabia, and Russia came after it.
FAQs:
1. By how much did China surpass the US in trade with India?
China’s trade with India was just USD 100 million higher than the US in FY24.
2. What were the main factors behind this shift?
There isn’t a single definitive reason. Possible explanations include fluctuations in global trade patterns, changes in import-export demands, and domestic economic situations in both India and its trading partners.
3. What were India’s main exports to China?
According to the report, India’s exports to China saw an 8.7% increase, with iron ore, cotton products, handloom textiles, spices, and agricultural products being some of the major exports.
4. Did India’s trade with the US decline?
Interestingly, India’s trade with the US also witnessed growth in FY24. Exports to the US increased significantly by 47.9%, leading to an expanded trade surplus for India.
5. What are the implications of this shift for India?
The long-term implications of this change remain to be seen. It’s important to monitor how this development affects India’s trade diversification goals and its strategic partnerships with both China and the US.
