China Topples the US to Become India's Top Trading Partner

China Topples the US to Become India’s Top Trading Partner

In FY24, China surpassed the US as India’s top trading partner, with total trade valued at $118.4 billion, driven by an 8.7% rise in exports and 3.24% in imports.

China has surpassed the United States to become India’s leading trading partner for the fiscal year 2023-24, according to data from the economic think tank GTRI. Bilateral trade between India and China amounted to USD 118.4 billion, slightly edging out the USD 118.3 billion in trade between India and the US during the same period. This marks a shift from previous fiscal years, where the US held the position as India’s top trading partner.

India-China Trade Dynamics in FY24

In FY24, India’s exports to China experienced a significant rise of 8.7%, reaching USD 16.67 bn. This growth was driven by various sectors, including iron ore, cotton yarn/fabrics/made-ups, handloom, spices, fruits and vegetables, plastic, and linoleum. Conversely, imports from China increased by 3.24%, amounting to USD 101.7 bn. This surge in imports widened the trade deficit, which escalated from USD 53.57 bn in FY19 to USD 85.09 bn in FY24, prompting concerns about stagnant exports amidst rising imports.

India-US Trade Fluctuations

On the flip side, India’s trade ties with the United States witnessed some fluctuations. While exports to the US decreased by 1.32% to USD 77.5 bn in FY23 compared to USD 78.54 bn in FY24, imports saw a more notable decline of approximately 20%, falling to USD 40.8 bn. Despite these fluctuations, overall trade with the US demonstrated growth, marked by a significant 47.9% increase in exports and a 14.7% rise in imports, resulting in an expanded trade surplus of USD 36.74 bn.

Historical Trade Partners

Historically, China has consistently been India’s leading trading partner, holding this position from 2013-14 through 2017-18, and again in 2020-21. Prior to China, the UAE occupied the position of India’s largest trading partner. The US took the lead in FY22 and FY23. In FY24, the UAE ranked as India’s third-largest trading partner, with a trade volume of USD 83.6 bn, followed by Russia (USD 65.7 bn), Saudi Arabia (USD 43.4 bn), and Singapore (USD 35.6 bn), according to Commerce Ministry data.

Conclusion: China has emerged as India’s leading trading partner in FY24, surpassing the US as Bilateral trade hit USD 118.4 billion. Despite a trade deficit due to increased imports, the enduring relationship brings out the significance of their economic ties and highlights opportunities and challenges for both nations.

Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.