The bloodletting in Galwan Valley last year does not appear to have hit India’s trade with China. Data from India’s Commerce Ministry said China was our top trading partner with over $77 billion of business last year, edging past the United States. This was less than the $85.5 billion India-China trade of 2019, nevertheless it underscored how dependent India remains on China-made heavy machinery, telecom equipment and home appliances.
Although India’s exports to China went up to around $19 billion, an increase of 11 per cent from the previous year, the deficit is a yawning $58.7 billion which is unlikely to be bridged soon. The general view in the business community is that government incentives for Make in India will take a few years to get off the ground. So imports from China will continue simply because these are more affordable.
A way to get around the deficit is if there is substantial Chinese investment in Indian manufacturing. Reports say India is all set to clear 45 China investment proposals including a $1 billion automobile venture by Great Wall Motor and SAIC Motor Corporation. These are among 150 proposals that got stuck in the wake of last year’s Ladakh hostilities. Automobiles along with chemicals, electronics and textiles are deemed non-sensitive areas where Chinese investments are welcome.