Indian and Chinese national flags flutter side by side at the Raisina hills in New Delhi, India, in this file photo. (PHOTO / XINHUA)

India’s trade with China continues to rise steadily and analysts are counting on increasing exchanges with great potential after COVID-19 eases.

Indian government officials and experts said the increase in India’s trade deficit with China is an indication that Indian manufacturing industries and exports are expanding as the country is largely dependent on China for its raw materials.

The trade deficit between India and China reached $51.5 billion from April to October, Indian Federal Commerce and Industry Minister Piyush Goyal told the the Indian Parliament on Dec 9

The trade deficit between India and China reached $51.5 billion from April to October, Indian Federal Commerce and Industry Minister Piyush Goyal told the the Indian Parliament on Dec 9.

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The trade deficit for 2021-22 had jumped to $73.31 billion, compared to $44.03 billion in 2020-21, Goyal said. 

The federal minister said that most of the goods imported from China are capital goods, intermediate goods and raw materials used for meeting the demand of fast expanding sectors like electronics,telecom and power.

"The rise in import of electronic components, computer hardware and peripherals, telephone components can be attributed to transforming of India into a digitally empowered society and a knowledge economy. India's dependence on imports in these categories is largely due to the gap between domestic supply and demand," Goyal added.

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Chinese Foreign Ministry spokesperson Zhao Lijian said in Beijing on Nov 22 that India and China’s trade has increased by 14. 6 percent during the first nine months of the year to reach $103.6 billion.” Because of varied counting methods, trade data of the two countries often appear different.

Experts predict that bilateral trade between the two countries in 2022 will exceed last year’s record.

India’s junior minister of commerce and industry Anupriya Patel said in Parliament on Dec 9 that that many imports were inputs for manufacturing and exports.

The major goods imported from China included electronic goods, organic and inorganic chemicals, medicinal and pharmaceutical products, fertilizers, crude and manufactured and, dyeing, tanning, coloring materials, Patel said.

China is a major source of raw materials for India's manufacturing sectors, so rising imports from China also help Indian exports to boom, said Biswajit Dhar, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.

Pointing out the reason for Indian importers’ preference to import from China, Dhar said no other country can match the price and quantity of China due to its large scale production units. 

Large scale production can bring down production cost and China has this advantage after it has emerged as the factory of the world, Dhar added.  

India’s economy is expanding and the current trade deficit with China will continue for the next few years, Dhar said. 

While India is the second largest exporter of cell phones, components of cell phones or smartphones are coming only from China. So when mobile phone exports grow, India’s imports from China will also increase, said Anil Bhardwaj, secretary-general, Federation of Indian Micro and Small and Medium Enterprises.

India has emerged as the second-largest mobile phone manufacturer in the world with a 126 percent jump in production from 2021 to 2022, according to government data.

About 70 percent of chemical and other manufactured goods used by the Indian pharmaceutical industry are also imported from China but experts said the Indian government is not worried about its dependence on China. 

The writer is a freelance journalist for China Daily.