Indian exports to China surged by 75 per cent in the first quarter this year, with a big increase in textiles and stones and precious metals shipments bringing down the trade deficit.
Overall trade with China grew by about 66 per cent during the period, raising hopes of achieving the trade target of $60 billion this year, according to data released by the Chinese government today.
The trade figures released by the Chinese customs brought blushes back on the faces of Indian diplomats and trade officials here as Indian exports -- which declined radically last year and resulted in a $16 billion dollar trade deficit -- have shown significant improvement.
According to the trade data, Indian exports to China touched $5.81 billion in the period between January and March this year as against $3.31 billion last year when overall trade volumes declined to about $44 billion due to the global economic downturn. The increase was stated to be 75 per cent.
However compared to 2008, during which the trade volumes touched a record $52 billion, this year’s quarterly exports from India still fell short by $53 million. The overall trade between the two countries this quarter touched $14.14 billion against $13.24 billion in 2008 and $9.3 billion in 2009.
The new trade figures brought cheer to China too, as its exports to India went up by 38 per cent compared to 2009. Chinese exports in Q1 were also higher than the $6.9 billion figure for exports to India during the same period in 2008.
The trade deficit for India was $2.5 billion for the first quarter, slightly lower than the $2.7 billion figure in the first quarter of 2008. The two countries had set $60 billion as the trade target this year and the first quarterly figures showed that they are on their way to reaching it, Indian officials said.
Accrding to the new figures, cotton, yarn and fabric exports from India have gone up from $495 million in 2008 to $729 million in the first quarter. The exports in this sector fell to $81 million around the same period in 2009.
Similarly, Indian exports of copper have gone up from $124 million in 2008 ($425 million in 2009) to $264 million. Exports of precious stones and metals have gone up from $90 million in 2008 ($64 million in 2009) to $164 million.
In plastics too, Indian exports have done well, going up from $59 million in 2008 ($28 million in 2009) to $109 million in this year’s first quarter. Reacting to the positive trend in Sino-Indian trade, the Indian Ambassador to China, S Jaishankar, said here, "I am encouraged by the first quarter figures, particularly the pick (up) in cotton, fabrics, copper products, jewellery, plastics and, to some extent, even machinery".
"I would like to see stronger figures for pharmaceuticals and I would like to hear good news on IT side. We know that this will not happen by itself. We have 20 major commercial events this year. We have done a big IT event involving Indian providers and Chinese customers,” he said referring to the recent IT summit held by the Indian embassy here to push IT exports.
"We want to do the same thing in pharmaceuticals too. We will use the trade fair in China’s Kunming in June to push agro products. We also plan to do a Made-in-India exhibition. We have not firmed the details. Bottom line is that the first quarter is encouraging, but (there is) a long way to go", he said.
Indian officials see a positive trend in the new trade volumes as Indian exports of iron ore, slag and ash have come down from $4,473 million in 2008 ($2,300 million in 2009) to $3,847 million in the first quarter.
China is a big importer of raw materials, especially iron ore, which constituted the bulk of Indian exports so far, causing concern back home as China made more money by exporting the finished goods from of the ore back to India.
The new figures show that China’s exports to India witnessed a surge in items like machinery (36 per cent), electrical machinery (19 per cent), iron and steel (367 per cent) and vehicles other than railways (122 per cent).
China has already emerged as India’s biggest trade partner, while India remained Beijing’s ninth trade partner. Indian officials said that if the trend continues, Sino-Indian trade would touch a record $60 billion, the target set by the two countries for this year.
"The trend is positive and the target looks achievable", Nagaraj Naidu, First Secretary for Trade in the Indian Embassy here said. He said China’s already high trade volumes in India may go up if China takes active interest in Indian infrastructure development, involving billions of dollars.
India too looked to China because it involved huge savings. He also believes that China may look to India as a major investment destination, as it is set to transform from ab export-driven economy to an investment-driven one.
Under pressure from US and other countries to let its yuan currency appreciate against dollar, he thinks that China would begin shifting to overseas investments as its exports become more expensive.
