China has regained its status as India's primary trading ally, outpacing the United States for the first time in two years, as per the most recent data unveiled by the Global Trade Research Initiative (GTRI). In the fiscal year 2024, bilateral trade between India and China reached $118.4 billion. Imports surged by 3.24% to $101.7 billion, while exports grew by 8.7% to $16.67 billion.
In contrast, the trade relationship between India and the US witnessed a marginal downturn. Bilateral trade in the fiscal year 2024 amounted to $118.3 billion, with Indian exports experiencing a slight decline of 1.32% to $77.5 billion, while imports dropped by 20% to $40.8 billion. The economic interplay between India and China has drawn considerable attention, primarily due to India's significant dependence on Chinese imports across pivotal sectors like telecommunications, pharmaceuticals, and advanced technology.
The GTRI report highlighted significant dependence, noting, "India imported $4.2 billion worth of telecom and smartphone parts, accounting for 44 percent of total imports in this category, indicating significant reliance on Chinese components. Laptops and PCs imports from China totalled $3.8 billion, making up 77.7 percent of India’s imports in this sector".
Reacting to this trend, India has initiated several strategies aimed at mitigating its reliance on Chinese imports. These measures encompass the implementation of production-linked incentive schemes (PLI), the imposition of anti-dumping duties, and the enforcement of quality control orders. Notably, India's import of lithium-ion batteries, particularly for electric vehicles, largely sourced from China, reached a value of $2.2 billion, constituting 75% of such imports. This underscores the pivotal position China holds in India's endeavors towards the electrification of transportation.
The report also examined key trading connections, highlighting notable shifts in trade patterns with nations such as Russia and Saudi Arabia. Russia's trade metrics registered a remarkable surge, marked by a staggering 78.3% growth in exports and a soaring 952% increase in imports, resulting in a significantly expanded trade deficit. Conversely, trade interactions with Saudi Arabia demonstrated a more equitable expansion, with exports more than doubling and imports experiencing a slower pace.