By Srinidhi Ragavendran and Ruchi Bhatia
India faces growing trade imbalances with China as Beijing’s non-tariff barriers continue to restrict access for Indian products, Finance Minister Nirmala Sitharaman said on Friday.
“With China, I think our trade balance is against us, and it is growing exponentially,” Sitharaman said on the sidelines of the International Monetary Fund meeting in Bangkok, speaking with the Atlantic Council. “China uses non-tariff barriers unhesitatingly,” and that is “the biggest hurdle in the trade between India and China.”
Sitharaman cited phytosanitary rules — restrictions intended to protect against plant pests and diseases — among the barriers facing Indian exporters. She called out China for denying market access to India’s goods that have “immense” potential in the mainland, including generic drugs, beef and vegetables.
India-China ties plunged into a deep freeze in 2020 after a deadly border clash, triggering years of diplomatic distrust and restrictions on Chinese investments and business ties. Relations have gradually improved since then, with New Delhi and Beijing taking steps to ease border tensions and restore high-level engagement. India’s Prime Minister Narendra Modi and Chinese President Xi Jinping have also renewed efforts to stabilise ties.
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India’s trade deficit with China has crossed $100 billion so far this year. Yet, Sitharaman said, India has not sought to retaliate with any non-tariff barriers or countervailing duties. Sitharaman’s comments come after External Affairs Minister S. Jaishankar said earlier this week that India isn’t “getting a level playing field in China.”
Beyond India-China ties, Sitharaman also took aim at India’s trade relationship with Southeast Asian nations, describing existing trade agreements as “very skewed” against India.
While New Delhi intends to maintain its trade agreement with the Asean bloc, the terms would need to be refashioned, she said.
India remains the world’s fastest-growing major economy, supported by strong consumption and investment. Sitharaman, however, flagged the country’s dependence on imported crude oil and fertilisers as a key vulnerability. The bill for those essential imports is “big and growing,” she said, adding to the flow of foreign exchange out of the country.
The rupee has come under sustained pressure this year as surging oil prices swell India’s import bill, while foreign capital outflows and high US yields add to demand for dollars. The Reserve Bank of India has stepped up its defense of the currency, selling dollars and introducing measures including a special facility to meet state-owned oil companies’ foreign-exchange needs and tighter rules on currency derivatives. Those steps have helped the rupee recover from near-record lows, though the underlying pressures remain.