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Data of the first 5 months of 2021-22 indicates that Imports from China surpass 2019-20 levels

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The imports from China during the first half of 2020-21 fell on the back of COVID-19 restrictions. While the imports in 2020-21 recovered during the latter half, the first five months of 2021-22 present a different story. In the first five months of 2021-22, imports from China have surpassed the 2019-20 levels. Exports to China have also increased though not at the same levels. 

In his recent address to the nation on 22 October 2021, Prime Minister Narendra Modi reiterated the message of the need to buy “made in India” products. In his address to the nation on achieving the milestone of 100 crore COVID-19 vaccine doses, the PM also emphasized on being vocal for local. 

This message is in line with the government’s initiative announced last year, “Aatmanirbhar Bharat” or self-reliant India, the target of which is to develop local industry and become less reliant on imports. In earlier stories, we have highlighted the trends in trade with India’s major trade partners like the USA & China. The data indicates that, despite the prevailing border tensions with China and calls from a few sections within India to ban the usage of Chinese products, there has been an increase in imports from China.  In this story, we look at the trade with China during the current financial year (2021-22).  

China’s share in the overall imports has increased in 2020-21 

In an earlier story, we highlighted that China’s share in the overall trade during the first four months of 2020-21 increased when compared to the same period of 2019-20. As per the information available in the Department of Commerce’s Export Import data bank,  the same trend continued for the remainder of 2020-21. The share of imports from China as well as the exports have increased during 2020-21. 

  • In 2020-21, the total value of the exports to China was 21.19 billion USD, which is around 7.26% of India’s total exports that year. Both the value as well as the share has increased compared to the earlier years. In 2019-20, the value of exports to China was 16.61 billion USD which was around 5.3% of India’s overall exports. While this is in continuation of an increasing trend over the last few years, the quantum of increase in 2020-21 is higher than in previous years. 
  • The value of imports from China during 2020-21 was nearly the same as in 2019-20. In 2020-21, the total value of imports from China was 65.21 billion USD while in 2019-20, it was 65.26 billion USD. The value of imports in both these years is lesser when compared to earlier years. However, in terms of the share of imports from China in India’s overall imports, it has increased from 13.74% in 2019-20 to 16.53% in 2020-21. This share is the highest in the last 10 years i.e., from 2011-22 to 2020-21. 

Raw materials and other inputs for various industries form the key part of imports from China. The lack of industrial activity due to COVID-19 pandemic-induced lockdowns could be one of the reasons for the fall in the volume of imports with China. As the value of imports from China indicates, there is a general fall in the overall trade with most of the countries during 2020-21 on account of COVID-19. 

In the current financial year, the value of exports to China increased while the share dropped 

As per the monthly data available in the ‘Export Import Data bank’ of the Ministry of Commerce, the total value of India’s exports in the first five months of 2021-22 (April – August) is 164 billion USD. Of this, the value of exports to China was 10.58 billion USD. This is around 6.44% of India’s overall exports. The overall value of exports to China during this period in 2021-22 is higher than during the same period in 2020-21 when was 8.9 billion USD. However, the share of exports to China was higher in 2020-21 at 9.17%. While the share of exports to China has decreased compared to the same period last year, it is still higher than in the pre-pandemic year of 2019-20.

In the current financial year, the value of imports from China increased by 58%, with a slight drop in overall share 

During 2020-21, the value of imports from China was the same as in 2019-20, albeit with an increase in the share.  So far in the first five months of the current financial year i.e., from April-August’ 2021, the value of imports from China was 34.14 billion USD, higher than the imports during the same period in 2020-21 by around 58%. However, there is a fall in the overall share of imports from China to 15.67% in the first five months of 2021-22 compared to 17.78% during the same period in 2020-21. Nevertheless, the share of imports from China in the current year is higher than during the same period in 2019-20, prior to the pandemic. 

It must be noted that there has been an exponential increase in the value of imports by India during April-August of 2021-22, with 217 billion USD compared to 121 billion USD during the same period in 2020-21. The value of imports is even higher compared to the pre-pandemic year of 2019-20 when it was 210 billion USD. Hence, while there is a marginal fall in China’s share out of total imports, it is mainly due to a higher increase in the overall imports. 

Mineral Fuels, Cotton among the products with an increase in export volume to China 

During the first five months of 2020-21, exports relating to ‘Ores, Slag & Ash’ reported the second-highest volume of exports to China with 1.72 billion USD, which increased to 1.8 billion USD during the same period in 2021-22. 

On the other hand, Iron & Steel, the product with the greatest export trade volume to China during the first five months of 2020-21 with 1.86 billion USD, reported a drastic fall in exports with just 0.69 billion USD during the same period in 2021-22. In the earlier analysis, we highlighted that there was a sharp increase in exports of Iron & Steel during the April-June period of 2020-21.

The value of exports for other major products ‘Organic Chemicals’ also fell, though to a lesser extent. The fall in the exports of these products was compensated by an increase in exports of other products, contributing to the overall increase in the volume of exports during this period. 

Major growth was observed in the case of Cotton, whose export volume increased from 0.27 billion USD in 2020-21 to 0.75 billion USD in the first five months of 2021-22. 

Exports relating to Mineral Fuels & oils also increased from 0.38 billion USD to 0.76 billion USD.  Articles made of Aluminum; Articles made of Copper followed by Electrical machinery & parts are the other exports which witnessed an increase in export value during April-August of 2021-22 compared to the same period in 2020-21. The trends reflect an increase in export volumes across diverse products.

Imports from China increased across product types

Electric machinery & equipment (which includes all integrated circuits & raw material for electronic equipment) reported the greatest imports from China with the value increasing from 6.05 billion USD during April-August of 2020-21 to 9.81 billion USD during the same period in 2021-22. 

The other major imports, Nuclear Reactors & appliances along with Organic Chemicals have also reported a significant import volume during this period.  Data does not indicate any reduction in imports of major products.  

Along with the previously mentioned products with high import volumes, a substantial increase is also observed in import volumes of other products. The import volume of plastic articles increased from 0.7 billion USD to 1.7 billion USD during this period. Similarly, there is an increase in the imports of Fertilizers from 0.55 billion USD to 1.29 billion USD. 

The import of products under the head of ‘Parts & accessories relating to Optical, photographic & medical instruments’ also increased substantially. 

Reliance on imports from China both for raw materials & finished products continues

The increase in the exports to China and the diversity of the exports is a positive development. However, there is also a proportionate if not a greater increase in the value of imports from China. The imports during the first five months of 2021-22 have not only surpassed the value of 2020-21 (which was lower due to the pandemic) but also the value of imports in the year prior to the pandemic, 2019-20. 

The opening up of the economy post the lockdown restrictions has increased the demand for various electronic and other products which in turn increased the demand for various raw materials. Since imports from China are a major source of these raw materials for multiple industries, import volumes from China increased across product categories. 

China continues to enjoy the Most Favoured Nation (MFN) status, which facilities smoother trade between the countries and lower import tariffs for certain products. While this could be helpful to many industries reliant on imports from China, it would hurt the local industry in the long run. Data indicates that India has a long way to go in attaining self-reliance.

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