Increase in Import from China.
As per the records it was the first time, India’s trade mark with China crossing the $100 billion in 2021. It reached $125.6 billion, imports accounting for $97.5 billion, while exports for $28.1 billion. It is very obvious that India imports far more from China than it exports. This shows that trade deficit in India is growing rapidly.
Some of the biggest India’s imports are electrical and mechanical machinery, range of chemicals included in intermediate imports, active pharmaceutical ingredients, auto components, and a rise in medical supplies since covid 19. There is also increase in finished goods import like integrated circuits, laptops and computers and oxygen concentrators.
Even with the political tensions between the countries, the trade continues to boom but it’s not the same with other economical aspects. Investments from China have plunged drastically in the past year. More than 200 Chinese apps remain banned in India.
India is now considering to reduce some of the imports by manufacturing some of these goods in India itself or source from elsewhere.
Top 3 imported products in India.
Oil- India is one of the most oil import dependent countries in the world. India buys most of its crude oil from Middle East, especially Saudi Arabia and Iraq. In the last decade, India’s oil imports have soared.
Precious Stones- Indians being fond of shiny materials, it is very well understood the demand for precious stones, particularly gold. India spends more than $60 billion to buy jewels.
Electronics- This won’t be a surprise to us, since more than half of our electronics are labelled as “Made in China”. So yes, half of the total electronics are imported from China in India. India spends around $32 billion to buy electronics.
Heavy machinery, organic chemicals, plastics, Animal and vegetable oil & Iron and steel are amongst the most imported items in India.
How increased Imports affect economy?
Increase in imports of a country leads to trade deficit. A country usually imports goods from other countries when they cannot produce enough in its home country and the demand still continues to rise or stay. This makes a country dependent on other countries' economic and political power to fulfill its needs. The price of the imported goods will also fluctuate with the changes happening in the exporting countries. It is also important for the countries with high import levels to have more than enough foreign reserves, as that is the source to make payments. Domestic businesses are also challenged at the same time to keep up with the international companies. During such times small business tends to fail.
Note:
Intermediate imports: Intermediate goods are products used to produce or manufacture other finished goods which may be sold domestically or exported. Rise in intermediate goods is a good sign as it shows industrial recovery and demand for inputs.
Trade deficit: A situation wherein the amount of a country’s import is greater than a country’s export. Meaning, a country buys more from other countries than it sells to other countries.
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