China remains India’s top source of imports as shipments rise to $98.5 billion

China remained India’s leading supplier of imports in the fiscal year ended March 31, with shipments increasing 4.16 percent to $98.51 billion despite a decrease in its percentage of inward shipments.

According to figures issued by the commerce ministry, India’s trade imbalance with China expanded in FY23, owing to an increase in imports and a decrease in exports. India’s exports to China fell by 28% to $15.3 billion. The trade deficit increased to $77.6 billion in FY22, up from $72.9 billion in FY22.

The report comes amid ongoing worries over China’s dependence on crucial raw materials and imports. As nations aim to reduce their reliance on the world’s second-largest economy, India has launched a plethora of production-linked incentive programmes to stimulate local manufacturing and attract foreign investment.

Supply chain disruptions caused by pandemics, as well as the US-China trade conflict and geopolitical conflict, made India an appealing investment location. Border tensions between India and China have prompted proposals to reduce commercial ties.

Nonetheless, the administration remained pragmatic regarding commerce with its bigger neighbour.

“Even though we are making in India, we cannot make every little component on our own and need to import,” an official said, asking not to be identified. “We are one of the fastest-growing economies with consumption constantly increasing. The growth of our economy will reflect in our imports, too.”

China’s import share declines

Despite an increase in absolute numbers, China’s proportion of Indian imports fell to 13.79 percent in FY23 from 15.43 percent the previous year. According to the official, this was due to the increased importation of fertilisers and electrical items from other nations.

“We are working on reducing our dependence on China. We are also working on diversification of our imports basket so import dependence from particular countries can decline,” the official added.

The UAE and the United States came in second and third, with 7.45 percent and 7.03 percent of India’s import basket, respectively.