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Data: India’s Trade Deficit With China Was A Record High in 2021-22, Could Further Increase in 2022-23

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Trade data available with the Ministry of Commerce & Industry indicates that India’s trade deficit with China was the highest in 2021-22 at more than $ 73 billion. If one goes by the trends for the first 8 months of 2022-23, the trade deficit could further increase by the end of 2022-23.

Recently, a few news reports have cited the information released by China’s General Administration of Customs (GAC) stating that India’s trade deficit with China has crossed the $100 billion mark for the first time. As per these reports, overall India’s trade with China has crossed $135 billion in 2022. 

The latest information available from the Indian Government sources is up to November 2022. As per the data provided by the Department of Commerce’s Export Import Data Bank, by the end of November’2022, the total trade with China during 2022 is around $108 billion. Of this, the value of imports is $ 94 billion and that of Exports it is $ 14 billion. This implies a trade deficit of $ 80 billion during the 11 months of 2022. 

While China has been one of India’s leading trade partners, the increase in trade amidst continuing bilateral and border disputes does assume significance. In this context, we look at the trends in India’s Trade with China in recent years. As with our earlier stories in this regard, we have considered the fiscal year and not the calendar year for analysis. 

Imports from China during 2021-22 increased by 45% compared to previous year 

During 2021-22, the overall value of Imports from China was $ 94.6. This is 45% more than the previous year 2020-21, wherein the value of imports was $ 65.2 billion. The proportion of the increase in imports is the highest over the last 10 years. 

The declining trend in imports from China since 2018-19 was also halted in the year 2021-22, with this exponential increase in imports. On the other hand, there has only been marginal growth in exports to China. The value of exports in 2021-22 was $ 21.35 billion compared to $ 21.18 billion in 2020-21. Barring a slight decrease in 2019-20, this is the least growth of exports to China over the 10-year period of 2012-13 to 2021-22. 

The exponential increase in the value of imports from China in 2021-22 coupled with only a minimal increase in the exports to China has worsened the trade deficit with China.  Since 2018-19, there has been an improvement in the trade deficit with China, where it fell from $63 billion in 2017-18 to $ 44 billion in 2020-21.  However, in 2021-22, the trade deficit increased by over 67% to $ 73.3 billion. 

India’s Trade deficit with China has further widened during 2022-23

The latest available data for 2022-23 is until November’2022. During the first 8 months of the current fiscal (April – November), the total value of imports from China is $ 67.9 billion. During the same period last year, the value of imports was $ 59.2 billion. As indicated above, there was an exponential increase in imports during 2021-22, the value of which is the greatest so far. 


Going by the trends during the first 8 months of 2022-23, trends indicate that the overall value of exports could be higher in 2022-23 compared to 2021-22. While the imports from China have increased, the exports during the current fiscal do not present a favourable picture. For the first time since 2016-17, the imports in the first 8 months of 2022-23 are lower than the previous year. During April-November 2022, the total value of exports to China was $ 15.6 billion. This fall sharply by nearly 37% to $ 9.89 billion. 

These opposing trends of increase in imports and decrease in export have further increased the trade deficit with China. During the period April-November 2022, the trade deficit is $ 58 billion. During the same period in the last fiscal, the deficit was $ 43.57 billion. As highlighted above, the trade deficit during 2021-22 was the highest. However, if the current trends hold, the trade deficit in 2022-23 could easily surpass the 2021-22 figure. 

Electrical Machinery & Parts, especially Semiconductors & ICs contributed to an increase in imports

Imports under the HS Code 85 i.e., ‘Electrical Machinery and Equipment and Parts thereof, etc.’ have the highest share of imports in 2021-22. Out of the total value of Imports from China in that year, 32% i.e., $ 30.2 billion are various imports from this category.  In the previous year 2020-21, the value of imports from this category was around $ 20.3 billion. The increase in imports in this category has resulted in a proportionate increase in overall imports. One of the main reasons for stable or decreasing imports during 2018-19 to 2020-21 was lower imports under this category. The increase in the imports under this category is driven specifically by the increase in the import of Semiconductors. The value of import of Semi-Conductors (HS 8541) increased from $ 1.9 billion in 2018-19 to $ 6.6 billion in 2021-22. Imports of these products further increased during 2022-23, which has contributed towards the increased trend of imports even during 2022-23, as highlighted earlier. 

The value of imports under HS category 86 i.e., ‘Nuclear Reactors, machinery, mechanical appliances, etc.’ have increased by around 42%. The total value of imports under this category in 2021-22, was $ 19.8 billion compared to $ 13.9 billion in the previous year. More specifically, the imports increased under the category ‘Automatic Data Processing machines & Units’ (HSC 8471) under this HS code. 

There is also an increase across the other major import categories including ‘Organic Chemicals’, ‘Plastic & articles’, ‘Fertilizers’, ‘Iron & Steel’, etc., which has contributed to the increase in the value of Imports during 2021-22. The import trends under these product categories persist during the period April-November 2022, which has contributed to a comparative increase in the imports even in 2022-23. 

Fall in Export of multiple major commodities during 2022-23 

As highlighted earlier in the story, the increase in the trade deficit with China during 2021-22, is largely contributed by an exponential increase in the imports from China while the value of exports nearly remained the same. However, during the 8 months of 2022-23 i.e., April-November’22, for which the data is available, the increase in trade deficit is not only influenced by the increase in imports but also a substantial decrease in the exports. Trends in recent years indicate that India has steady progress in its exports to China, with an increase in the value of exports of various products like Iron & Steel, Aluminium products, Cotton, Machinery appliances, etc. However, the trends reversed during 2022-23, with a fall in exports across these major commodities. 

During this period, the value of exports under ‘Ores, Slash, Ash, etc.’ fell from $ 1.92 billion in 2021-22 to $ 0.38 billion in 2022-23. In the case of ‘Iron & Steel’, it fell from $ 1.21 billion to $ 0.25 billion. Such a sharp fall in exports is also seen in the case of Cotton, Aluminium Articles and Copper Articles. Meanwhile, there is an increase in the exports of commodities under Mineral fuels. 

Trends indicate heavy reliance on Imports from China

The trends over the last two years not only indicate an increase in the value of imports from China but also indicate a sharp increase in imports of specific commodities which remained stable for a few years. 

In recent years, the overall value of imports from China was largely similar either because of a reduction or similar volumes in the case of electrical parts, machines, organic chemicals, Iron & Steel, etc. among others. However, since 2021-22, trends indicate a reversal.

To worsen the situation of trade deficit, the gains that India has made in recent years in exports of a few products to China seem to have been lost in 2022-23 with a sharp decline of exports across these major products. 

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HR professional, now focused on contributing towards a positive change in the society. Passionate reader. Loves writing and photography and to narrate stories through words and pictures.

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