China was India’s top import source in April-December 2022, with an increase of 11.9 per cent (year-on-year) to $75.87 billion, while exports to the country during the period declined 35.58 per cent $11.03 billion pushing up trade deficit in the first nine months of the fiscal to $64.84 billion.

While imports of essentials from China have to continue, the Commerce Department will continue to strike against low-quality imports from the country through various quality control measures and action will also be taken against reported under-invoicing of goods imported from the country, a person tracking the matter told businessline.

“India’s exports to China are down due to low demand from the country struggling with a resurgence in Covid-19 infections and other economic problems. However, India’s economic performance is good, and it needs to import raw materials from China, which has increased the trade deficit,” the source said.

Coming down more harshly against low quality imports from the country will not only check the growing deficit but also benefit consumers in India, the source added.

The Commerce Department has already issued quality control orders (QCOs) to check the import of low- quality toys from China and some other countries. It is now expected to soon issue QCOs for items such as electric fans and smart meters.

An important way in which India can curb the trade deficit is by increasing its exports to China, says Ajay Srivastava, trade expert and co-founder of Global Trade Research Initiative. “India fairs worse than many other countries. Shares of China in global exports of Japan, Korea, and the EU are 21.6 per cent, 25.3 per cent, 10.1 per cent, and 3.9 per cent, respectively. But the share of China in global exports of India is just 5.8 per cent,” he says in a recent report.

Market access

India must take up all market access issues faced by its exporters with China on a priority basis and may consider applying mirror regulations to imports from China.

“We are moving in the right direction with initiatives like Make in India and the reshoring of production by global firms to India. This will gradually raise India’s export profile and contain imports. India must invest in deep manufacturing. For EV batteries, we must produce lithium-ion cells; for laptops, we must make PCB; for mobile phones, we must make components,” the report stated.