China’s trade edge

IN its 2024 election manifesto, the BJP has stated that the Make in India programme, which was launched in September 2014, has contributed significantly to increasing manufacturing activity in the country. The ruling party has promised to make India a ‘trusted global manufacturing hub’. However, a report by economic think tank Global Trade Research Initiative (GTRI) suggests that the country has a long way to go before it can achieve the grand goal of atmanirbharta (self-reliance). According to the report, India’s imports from China jumped from about $70 billion in 2018-19 to over $101 billion in 2023-24, resulting in a cumulative trade deficit exceeding $387 billion over a five-year period. Beijing’s share in New Delhi’s imports of industrial goods — telecom, machinery and electronics — has risen to 30 per cent from 21 per cent in the past 15 years, underlining India’s increasing dependence on the Dragon for these items. No less dismal is the fact that India’s exports to China have stagnated at around $16 billion annually from 2019 to 2024.

Even as India has stood firm against China on the diplomatic and military fronts after the Galwan clash of June 2020, it has not been able to stall the Chinese march in the economic arena. China continues to have the upper hand in bilateral trade despite India’s repeated insistence that the resolution of the boundary dispute is a prerequisite for the restoration of normal relations. It is apparent that Beijing’s ploy of delinking the border standoff from trade and business ties is paying rich dividends.

Ominously, the GTRI has estimated that Chinese imports will rise in the coming years. The huge trade deficit has strategic, economic and geopolitical implications for India. New Delhi needs to plug the gaps in the Make in India programme in order to make the manufacturing sector more productive and resilient. The dream of becoming a global manufacturing hub will remain just a dream unless India manages to shake off China’s overbearing presence.