What Are The Items China Imports From India?

In November 2020, India's exports declined 9% according to recent data released by the Commerce & Industry Ministry. India's top five export destinations in 2020-21 will be the USA, China, UAE, Hong Kong, and Singapore. Also this year, China has been the largest importer of Indian goods, followed by the United States, UAE, and Hong Kong.

The USA is India’s biggest trading partner. However, following closely behind is China, who we now seem to have run into trouble with over various issues. In recent months, political opinion regarding China has taken a hit due to the Coronavirus pandemic and border skirmishes with India. 

Quite a few significant politicians have called for a large-scale boycott of Chinese goods. While we do import quite a few products from China, we also export some raw materials and products to them as a part of our trade relationship.

The items China imports from us mainly revolve around the manufacturing industry. In this article, we will take a closer look at the goods China imports from us, the items China exports and what impact it will have on the trade relationship.

Why Does India Import Products From China?

India imports products from China for various reasons, with the primary factor being the combination of quality and affordability. Post-pandemic, China has consistently been India’s top import source, accounting for a significant portion of the country’s imports. In the first quarter of 2023, shipments from China to India increased by 4.16%, reaching $98.5 billion.

According to the United Nations COMTRADE database for international trade in 2022, India imported a record-high of $89.66 billion worth of goods from China in the first nine months of the year. Despite an increase in India’s average applied import duty from 15% to 18.3%, the imports from China continued to rise.

India-China Trade Balance

The trade balance between India and China traditionally favours China, with India importing more than it exports.

Although there was a slight drop in imports in 2023, India’s trade deficit remained high, standing at -1.38 Billion USD in April. The persistent trade deficit is attributed to a limited range of imported commodities and challenges in market access for Indian products like pharmaceuticals and IT/ITES.

Major imports from China to India encompass a variety of goods, including consumer electronics, computer hardware, electrical parts, machinery, chemicals, power-related equipment, telecom products, plastics, and fertilizers. Conversely, India primarily exports raw-material-based commodities such as iron ore, mineral fuels, organic chemicals, cotton, copper, diamonds, and natural gems to China.

Several industries in India, particularly the pharmaceutical sector, heavily rely on Chinese products. For instance, the pharmaceutical industry, valued at $42 billion, imports around 68% of its active pharmaceutical ingredients (APIs) from China. The demand for medical supplies from China has also seen a significant increase in recent years.

What are the Items China Imports from India?

 While most of us are aware of the goods China exports to us, many are unaware that India too is a significant supplier to the Chinese. Annually, India generates revenue exceeding $15.5 billion by exporting items to China, making it a major destination for Indian goods. Our exports to China make up 5.3% of our overall exports. Some of the main products that India exports to China are as follows;

1. Mineral fuel and oil
2. Refined copper and copper alloys
3. Cotton yarn containing over 85% cotton
4. Uncarded and uncombed Cotton
5. Petroleum oils
6. Oils from bituminous minerals, excluding crude
7. Building stones, such as granite, sandstone, basalt and porphyry
8. Iron ores and concentrates
9. Roasted iron pyrites
10. Vegetable fats and oils, such as jojoba oil
11. Artificial corundum
12. Aluminium oxide and hydroxide.
13. Cyclic alcohols along with cyclonic, and cycloterpenic derivatives.
14. Textile materials for wigs, such as human hair, wool and animal hair
15. Agricultural products like grains and tobacco
16. Engineering products including diesel engines and compressors
17. Marine foods
18. Consumer durables

As we can see, the primary items China imports from us are iron and steel ores, chemicals and textile materials. Iron ore and its derivatives make up 53% of our total import to China, with other prominent raw materials being plastic, rubber and inorganic chemicals. China’s strategy over the years has been to import raw material from countries and export finished goods at higher prices. You Can get the Top Services For Import Export Codes from the Experts.

What are the goods China Exports to us?

 While we focused on India’s exports to China until now, let us now take a quick look at the items we import from them. India and China have held trade ties with each other for over 2000 years, sharing several vital goods and products.

In recent years, India has depended on the Chinese for products, such as organic chemicals, mobile phones, household items and nuclear reactors. Over 14% of India’s total imports, worth over $62.3 billion come from China as per reports from the Department of Commerce. The primary goods China exports to us are as follows:

1. Electronics components and products
2. Organic Chemicals
3. Nuclear Machinery, including reactors
4. Computer parts
5. Automobile parts
6. Toys
7. Fertilisers
8. Mobile phones
9. Lightings
10. Dairy products

Chinese firms also supply around 80% of India’s solar modules and cells, as they are costly to make in India. Another primary beneficiary of Chinese imports is the telecom industry with Airtel and Idea’s 4G network leveraging ZTE and Huawei technology. Industries involved in the production of refrigerators, mobile phones and automobiles also import several vital components from China. 

Furthermore, over 70% of drug intermediaries used for pharmaceutical production in India come from China. While India enjoys a trade surplus of $16 billion with the USA, it has a trade deficit worth $53 billion with China in the assessment year 2018-19.

Plans for the Future

 The Honourable Prime Minister of India called for the initiation of the Atma Nirbhar Bharat plan to combat large-scale Imports from China. However, this project might take a while to get running as it is an extensive operation. Therefore, finding an alternative to China will be a difficult task for our administration. Also, as seen from above, the amount of trade between these two nations is massive. Enforcing a stringent ban immediately will raise the cost of several products in India. Border disputes had been steadily reducing the bilateral trade between the two nations, with trade having gone down by 15% since 2018.

However, the sudden rise in military action within the Galwan valley is a cause of concern for India. Furthermore, international antagonism against the Chinese is growing due to the ongoing health pandemic.

All in all, this might be India’s moment to outshine its neighbour and capture more of the outsourced production market. As per reports from the Commerce and Industry Ministry, the import of Chinese products has declined to $21.58 billion while exports grew by 10% in September. Government officials are planning schemes worth  ₹ 25,000 crore to boost India production within the next five years. These schemes will remove Indian dependence on Chinese pharmaceuticals, fertilisers and insecticides.

Tips to Reduce Costs When Importing from China to India

For Indian business owners planning to import goods from China, considering the following tips can be beneficial:

Tip 1: Understand Indian Import Regulations

Before commencing imports from China, it is crucial to familiarize yourself with India’s Country Commercial Guide regulations. This knowledge helps avoid unnecessary fees and penalties. Questions to address include whether your business is a legal entity if it’s registered in India, and if you have obtained an Importer-Exporter Code (IEC) from the Director-General of Foreign Trade. Complying with these regulations ensures meeting requirements, establishing credibility, and preventing non-compliance issues.

Tip 2: Find Reliable Chinese Suppliers

Identifying trustworthy Chinese suppliers is key to cost-effective imports. Factors such as supplier experience, production capabilities, and certifications for the desired products should be considered. Evaluating if the chosen supplier offers competitive pricing for quality products is essential. Establishing a long-term relationship with Chinese suppliers can lead to improved negotiation terms, prices, and overall cost reduction.

Tip 3: Verify Product Quality

Ensuring the quality of imported products from China is vital. Despite having reputable suppliers, verifying the durability and functionality of products is necessary. For larger product orders, factory inspections can be employed, while inspection agencies can be utilized for testing smaller sample products. This verification process helps maintain product quality, control costs, and avoid selling defective products.

Conclusion

With several companies from around the world showing interest in shifting their operations to India, this could be an excellent opportunity for our country. The government too seems to be doing everything possible to attract such foreign investors and get them to establish manufacturing centers in India. Not only would this help employ millions, but it will also improve India’s economic standing on a global level.

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