China pips US as India's No.1 trade partner
China is now India's largest trading partner. This was revealed by the Economic Survey for 2007-08, which said that "China's trade share during April-October 2007 is even higher than that of the United States by Rs 600 crore".
The development marks the culmination of a trend that has been picking up momentum in recent years. As recently as six years ago, in 2001-02, the volume of trade between India and China was barely one-fourth of the trade between the US and India.
In fact, the UK, Belgium, Germany, UAE and Switzerland were all larger trading partners than China at that stage, data presented in the Survey showed.
In these last six years, however, China has overtaken all of them and in October this year pipped the US too.
The UAE itself has moved from being India's fifth largest trading partner to the third largest over this period, while Saudi Arabia is now at fourth position, with oil prices obviously playing an important role in its emergence as such a large partner.
The data also revealed the very different structure of trade that India has with the countries that are now its four largest trading partners.
While India's exports to the US are one-and-a-half times its imports from that country and the ratio of exports to imports in the case of the UAE is 1.2, with China and Saudi Arabia imports are much higher than exports.
Thus Indian exports to China are only 30% of its imports from its giant neighbour, while exports to Saudi Arabia are only 20% of the exports to that country. Concerned about the growing deficit with China, the Survey said that
"India's export policy with China needs to be carefully planned." It pointed out that India's exports to China were crucially dependent on a single item iron ore which accounted for 44%.
Calling for conserving this resource for future development, it pointed out that the other major item was non-ferrous metals with a 6% share. Demands for these items is likely to fall after the Beijing Olympics this year and hence India will have to diversify exports to China if the widening trade deficit is to be contained, it cautioned.
The data shows quite clearly that India's 12 largest trading partners which include Singapore, Australia, Nigeria and Iran besides the countries already mentioned account for a significantly larger share of our trade with the rest of the world than was the case six years ago.
Between them they accounted for 42.6% of India's global trade in 2001-02, but figures for April-September 2007 show that the share had risen to almost 55%.
