By Subrata Majumder
For the first time, India witnessed a paradoxical situation with its large trading partner. It is China who happened to be the top trading partner of India consecutively for four years till 2018-19. But, the trade relation turned sour with the outbreak of COVID 19. It rattled China’s significance as dependable supply chain. Added to this, the repeated face-off in border intensified security concern.
As a result, a trust deficit grew between India and China, which has become detrimental for the furtherance of trade relations. India has been facing a wide trade deficit with China. Notwithstanding, India opened the door for cheap imports from China, without indulging in any trade dispute on the line of US trade practices. But, a bell of concern rang when it found that its trade sovereignty was at stake due to over-dependence on China for some industries, which are related to new and emerging and healthcare industries.
This led the policy makers for a second thought on Chinese hegemony in the trade and growing Chinese investment in the country, even though it is on the background of foreign investment for Make in India. India vowed for an alternative to China as a new strategic trade and investment policy in Asia.
The widening trade deficit with China imparted a major impact on balance of payment. The fallacy of wide trade deficit lies with India importing substantially from China, more than it exports to China. The major factor attributing to this was the large importation of electronic and telecommunication equipment and parts. About 30 percent of total import from China was accounted by electronic and telecommunication equipment and parts.