India’s reliance on Chinese products increased in 2021

Shipments of finished electronics to chemical intermediates from China surged, pushing imports to a record $97.5 billion

India imported $16 billion more of its top 100 imports from China last year, an increase of almost two-thirds from the previous year, according to an analysis of trade figures, highlighting growing dependencies on many crucial imports.

India’s total imports from China broke a record $97.5 billion last year, constituting a large chunk of two-way trade which reached $125 billion, breaking the high mark for the first time. $100 billion, figures released earlier this month by the General Administration of China Customs (GAC) showed.

According to an analysis by India’s Ministry of Trade Data.

The top 100 items in value accounted for $41 billion, up from $25 billion in 2020, according to a study of the figures by Santosh Pai, an honorary fellow at the New Delhi Institute of China Studies. Most of the top 100 items – each of which accounted for more than $100 million in trade and included a range of electronics, chemicals and automotive components – saw strong growth. The list included both finished products and intermediate products.

In the first category, integrated circuits increased by 147%, laptops and personal computers by 77% and oxygen therapy devices by more than four times.

Intermediate products, especially chemicals, also recorded remarkable growth. One of them, acetic acid, increased more than eight times.

Among the reasons for the rise in imports are a recovery in domestic demand for finished goods from China and an industrial recovery. The growth of Indian exports to the world has also increased the need for many crucial intermediate inputs, and disruptions elsewhere have led to increased supply from China in the short term, for example in the case of coking coal previously sourced from India. Australia and Indonesia.

India’s record imports from China in 2021, amid a lingering political stalemate over the as-yet-unresolved crisis along the Line of Real Control (LAC), has reignited a debate over the sustainability of the relationship trade and a growing deficit. Over the past 12 months, according to GAC data, the value of India’s imports exceeded total two-way trade in 2019 before the pandemic.

“Need to differentiate”

India is sourcing both finished goods for the Indian market, such as electronics, in record numbers, while also relying on China for a range of intermediate industrial goods, many of which cannot be purchased elsewhere and are not manufactured in India in sufficient quantities.

While dependencies on China overall have increased substantially over the past year, Mr. Pai noted that it was necessary to differentiate between the different categories.

“While the growth of imports of finished goods such as toys, electronics or furniture, which we could manufacture in India, is not a good dependency, the fact that we acquire new intermediate goods, for example, is probably a good development in the bigger picture, as it means we are emerging as a manufacturing hub and need new inputs to meet the global demand for a finished Indian product,” observed Mr. Pai.

“The other question is which of these changes are short-term due to the disruptions during the pandemic, and which are the longer-term trends that we need to consider and address, and ask ourselves if we can start to manufacture in India rather than continuing to buy from China,” he added.

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