India is on a mission to increase its agricultural export to China, in an effort to diversify the latter’s agricultural imports. Factors such as the trade deficit with China, the US-China trade war, and steps taken by India to bridge this gap are key elements to understand in this context. Furthermore, it is also vital to note that India’s global strategies should incorporate sectors beyond agriculture.
India’s Trade Deficit with China: The Need for Agri-Diplomacy
India is actively seeking methods to decrease the substantial trade deficit of over $60 billion with China. According to 2017-18 reports, China contributed to approximately 39% of India’s trade deficit. Further statistics showed that the total trade activity between India and China rose beyond $89 billion in the same fiscal year, with Chinese exports to India nearing $76 billion.
Implications of the US-China Trade War
The ongoing trade war between the US and China has seen both nations imposing tariffs on each other. Consequently, China is now broadening its horizons towards non-US imports to diversify its import basket. With recent tariffs imposed by Beijing on numerous American farm products such as soybeans, corn, wheat, cotton, and more, India sees an opportunity to increase its export of soybean produce to China.
Efforts Made to Reduce Trade Deficit
At the Shanghai Cooperation Organisation (SCO) Summit in Qingdao in 2018, India and China signed an agreement which included the export of non-Basmati rice from India. Being a $1.5-$2 billion market for Indian rice, China holds a considerable position. In parallel, an agreement was also inked to increase sugar export from India to China.
| Year | Trade Deficit | Chinese Exports to India | Indian Exports to China |
|---|---|---|---|
| 2017-18 | $60 billion | $76 billion | $13 billion |
Looking Beyond Agriculture: The Way Forward
To tackle the significant trade deficit with China, India must think beyond the boundaries of agri-diplomacy. Several other areas can be exploited to increase trade with China and bridge the trade deficit. Some of these sectors include pharmaceuticals, IT services, and tourism, where India does have a considerable global presence but still has room to grow in China.
On the domestic front, it is imperative for India to make significant strides like modernizing its agriculture to compete at a global level. This is crucial as the high price of India’s farming products poses a major hurdle.