India's Trade Deficit falls with China.
                     India's Trade Deficit falls with China
Introduction
• According to government estimates, India's trade deficit with China dropped to $48.66 
billion in 2019-20 due to declines in imports from the neighboring country. 
Source: Swarajya
Past Record
• Exports to China stood at $16.6 billion in the last financial year, while imports were 
aggregated at $65.26 billion, the data showed. 
• The countries' trade deficit in 2018-19 was $53.56 billion, and in 2017-18 $63 billion.
Source: The Week
What are the products related?
• Clocks and watches, musical instruments, toys, sporting products, furniture, 
mattresses, garments, electrical appliances, electronic devices, chemicals, iron and 
steel objects, fertilizers, mineral fuel and metals are the major imports from China.
Source: Business Standard
Government’s Role
• The government is taking measures to minimize reliance on China for imports such as 
defining technical regulations and quality norms for many goods. 
• It has also imposed anti-dumping duties on several goods that are dumped below 
China's average prices on the domestic market in order to protect domestic players 
from cheap imports.
Source: Pixabay
Technical Regulation
• There are currently 371 items listed for the purpose of implementing technical 
regulations. 
• Technical regulations for 150 products were formulated out of the identified lot, which 
amounts to 47 billion dollars of imports.
Source: Business Standard
Quality Control Orders
• In the past year, more than 50 quality control orders (QCOs) and other technical 
regulations were notified including electronic goods, toys, air conditioners, bicycle parts, 
chemicals, safety glass, pressure cooker, steel items, electrical items such as cables. 
• China accounts for about 14 percent of India 's imports and is a major supplier to sectors 
such as mobile phones, telecommunications, electricity, plastic toys and critical 
pharmaceuticals.
Source: Pixabay
Fall in Foreign Direct Investment 
• According to data, foreign direct investment ( FDI) from China to India also fell from $229 
million in the previous fiscal year to $163.78 million in 2019-20. 
• India received $350.22 million FDI in 2017-18 from the neighboring country, and $277.25 
million in 2016-17.
Source: The Hindu
Tightening of FDI regulations
• The government tightened FDI requirements from countries sharing land border with 
India in April. 
• According to the amended FDI regulation, a company or entity from a country sharing 
land border with India can only invest in any sector after obtaining government approval. 
Source: FDI India
Increasing Deficit
• These measures were anticipated by India by Chinese companies and have bypassed the 
curbs by relocating their shipments from Hong Kong, which is administered by Beijing. 
• According to reports, India's trade deficit with Hong Kong increased to $6 billion in FY20 
compared with a trade surplus of $4 billion in FY18. India-Hong Kong trade scales flipped 
because of a significant increase in FY18-FY20 imports.
Source: The Hill
Conclusion
• Automotive ($987.35 million), metallurgical ($199.28 million), electrical equipment 
($185.33 million), services ($170.18 million), and electronics ($151.56 million) are the top 
sectors which saw maximum FDI from China during April 2000-March 2020.
Source: OpIndia