“With China, I think our trade balance is against us, and it is growing exponentially,” Sitharaman said. “China uses non-tariff barriers unhesitatingly” and that is “the biggest hurdle in the in the trade between India and China.”
Sitharaman specifically cited phytosanitary rules — measures designed to guard against plant pests and diseases — as key obstacles for Indian exporters. She noted that China continues to deny market access to items with "immense" mainland potential, including generic drugs, beef, and vegetables.
The comments follow statements from External Affairs Minister S Jaishankar earlier this week, who remarked that India isn’t “getting a level playing field in China.”
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Relations between the two Asian giants soured dramatically in 2020 following a fatal border clash, leading to diplomatic friction and strict curbs on Chinese investments. While Prime Minister Narendra Modi and Chinese President Xi Jinping have recently taken steps to stabilise ties and ease border standoff tensions, economic disparities remain stark.
India’s trade deficit with China has already crossed $100 billion this year, though Sitharaman noted that New Delhi has refrained from retaliating with non-tariff barriers or countervailing duties.
Beyond China, Sitharaman addressed broader trade challenges, characterising India’s existing agreements with Southeast Asian nations as “very skewed” against New Delhi. She stated that while India intends to maintain its trade deal with the ASEAN bloc, the terms must be refashioned.
Turning to domestic vulnerabilities, the finance minister emphasised India's high reliance on imported crude oil and fertilisers despite remaining the world’s fastest-growing major economy. She warned that the import bill for these vital commodities is “big and growing,” driving significant foreign exchange outflows.
The rupee has faced persistent downward pressure this year due to elevated oil prices, capital outflows, and high US yields. In response, the Reserve Bank of India has actively defended the currency by selling dollars, implementing tighter regulations on currency derivatives, and launching a special facility to satisfy the foreign-exchange demand of state-owned oil companies. While these interventions have pulled the rupee back from near-record lows, fundamental economic pressures persist.