Tuesday, July 17, 2012

India's trade deficit with China

Both China and India are low cost destinations for products. Both nations employ their billion strong workforces in order to produce goods at competitive rates. But, while India sources a number of goods from China, the dragon nation seems to mainly import raw materials from India. India's trade deficit with China increased to almost US$ 40 bn in FY12 from just US$ 9.1 bn in FY07. This deficit may even soar to US$ 60 bn, if India doesn't try to improve the situation. The Indian commerce and industry ministry is desperately sending delegations to China every month in order to peddle more value added products to the nation. However, it may not be very easy to enter the Chinese market. It will take some time before India can bridge the wide gap. Plus it is not the only nation trying to enhance exports to China. A number of nations are trying to penetrate the market and try and reduce China's upper hand with regards to world trade. This makes India's task all the more chal lenging. 

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