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China increases its share in India's trade basket post lockdown

Updated : October 19, 2020 08:21 PM IST

India’s trade engagement collapsed during the lockdown period, but has been inching towards normalcy in the past couple of months. CNBC-TV18 analysed trade data related to India's top 10 partners during the lockdown between April and August, which shows China has consolidated its share in India's Exim trade bouquet.

Export data (see table 1) in the April to August period shows that India’s outbound shipments to its top 10 destinations grew with only China on a year-on-year basis.

Top export destinations in April-August (Table 1)
Country Trade % Change
US: $16.79 billion (-24.62%)
China: $8.96 billion (27.35%)
UAE: $5.16 billion (-59.20%)
China+HK: $12.37 billion (5.78%)
Overall: $97.66 billion (- 26.64%)

In the period under consideration, India's exports to the neighboring country increased by 27.35 percent at $8.96 billion, while that with the US contracted by 24.62 percent at $16.8 billion and with the UAE shrunk by 59.2 percent at $5.16 billion.

As a result, China’s share in India’s export basket (see table 2) increased from 5.3 percent before the lock down period i..e in the 12 months ending March 2020 to 9.18 percent between April to August. In fact, if we combine India's outbound goods trade to China and Hong Kong -- which is administered by it -- then the total share in India’s export basket increased to 12.6 percent at $12.37 billion between April and August opposed to 8.8 percent in FY20.

India’s overall exports in the April-August period had contracted by 26.64 percent at $97.66 billion.

Share of exports in pre and post lockdown period (Table 2)
Country Exports in Apr-Aug FY21 Experts in FY20
US 17.2 percent 16.95 percent
China 9.18 percent 5.3 percent
UAE: 5.29 percent 9.21 percent
China+HK: 12.66 percent 8.8 percent

On the imports side (see table 3), there was de-growth with all top 10 sources of inbound shipments in between April and August. But the contraction was least when it came to China at 27.6 percent, from where India imported goods worth $21.58 billion. In contrast, imports from the US declined by 41.73 percent at $9.76 billion, while that from the UAE reduced by 47.3 percent at $6.26 billion.

Top countries for imports in Apr-August FY21 (Table 3)
Country Import % Change
China $21.58 billion  (-27.63%)
US $9.76 billion  (-41.73%)
UAE $6.26 billion  (-47.38%)
China+HK $26.75 billion  (-27.60%)
Overall $119.2 billion  (-43.34%)

A further analysis of inbound shipment data (see table 4) released by the Commerce Ministry shows that China's share in India's import basket increased from 13.75 percent in the pre-lock-down year ending March 2020 to 18.11 percent in the April-August period. The combined share of imports from China and Hong Kong in India's total imports stood at 22.44 percent during the April-August period vs 17.31 percent in FY 20. In the same months under consideration, share of US goods in India's imports stood at 8.19 percent as against 7.55 percent in FY20. UAE's share in India's imports went down from 6.39 percent in FY 20 to 5.26 percent in April-August 2020.

Increase in China's share in India's import basket (Table 4)
Country Import in April-Aug FY21 % in FY20
China 18.11 percent 13.75 percent
US 8.19 percent 7.55 percent
UAE 5.26 percent 6.38 percent
China+HK 22.44 percent 17.31 percent
Another set of trends becomes evident, with a look at item-wise export and import of goods with China. At $1.86 billion, the share of iron and steel in India’s exports bouquet jumped up by 20.77 percent between April and August, versus just 3 percent in the pre-lock down period of FY20. Similarly, in the imports basket, the share of computer hardware increased from 6.42 percent in FY20 to 8.6 percent at $1.85 billion in the April-August period as Indians bought more tablets and laptops due to work from home obligations.
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