A Vivo smartphone on display at a promotional event in New Delhi. Photo: AFP

In spite of a rising anti-China sentiment in India following a bloody border conflict last June, China has emerged as the country’s biggest trade partner. Bilateral trade between the two counties for the calendar year 2020 was US$77.7 billion, greater than the US ($75.9 billion) which had led the table in 2019.

However, the current figure is lower than the previous year’s India-China bilateral trade of $85.5 billion, as per provisional data from the Commerce Ministry.

Interestingly, after the June clash, in which 20 Indian soldiers lost their lives, the Indian government had taken a series of measures to curb trade with China. It had banned 220 mobile apps run by Chinese firms, including TikTok, increased scrutiny on Chinese investments in India, and hiked duty on certain products.

But this was outweighed by India’s heavy dependence on Chinese-made goods, especially heavy machinery, telecom equipment and home appliances. Despite an 11% increase in exports to China at $19 billion, the trade deficit stood at $40 billion, making it India’s largest. India’s imports from China were at $58.7 billion, more than the purchases from the US and the UAE combined.

The rise in exports to China was propped up mainly by metals. While aluminum registered a whopping jump of 2,023%, it was 336% for iron and steel and 75.4% for ores. The total value of metal exports to China in 2020 was $4 billion, out of which $2.53 billion was iron and steel.

India’s trade with the US fell as both imports and exports declined due to the muted demand for goods in the middle of a pandemic. As for exports, only the pharma sector registered a growth of 8.6% from last year, while diamond (-23.8%), apparel (-16.7%) and Chemicals (-12%) registered negative growth. All the imports from the US including gold, oil, civilian aircraft and others registered negative growth in 2020.

India recently took some steps to boost its manufacturing prowess under its Production-Linked Incentive scheme, which includes mobile phones, electronics and other items, as it looks to reduce its dependence on China and also tap Japanese and US firms leaving China because of souring trade ties. It has attracted several big names including Samsung, Apple’s contract manufacturers – Foxconn, Wistron and Pegatron, and others. However, experts claim it will take some years to achieve fruition and till then India’s trade deficit with China will continue.