Full Breakdown
India's Trade Strategy: The Imperative to Engage with China
10/6/2025, 9:32:17 PM
Overview of India's Trade Dynamics
India's trade strategy faces significant challenges, particularly in its relationship with China, which is crucial for enhancing India's manufacturing exports. B.V.R. Subrahmanyam, CEO of NITI Aayog, emphasized that without a focus on expanding exports to China and reducing import tariffs on raw materials, India's trade performance could lag in global markets. During the release of the quarterly "Trade Watch" report, he stated, "If you don't focus on Asia, if you are not able to sell much to China, it is pointless because it's a $15 trillion economy. You can't avoid that economy."
Current Trade Performance and Challenges
India's exports to China fell by 7% in 2024, totaling $15.1 billion, while imports surged by 10% to $109.4 billion, driven by increased shipments of electronic goods and chemicals. The report highlighted India's underperformance in key sectors such as leather and footwear, where exports amounted to $5.5 billion, representing only 1.8% of the global market valued at $296.5 billion. The high tariffs imposed on essential footwear inputs, compared to near-zero rates in countries like Vietnam and Italy, further hinder India's competitiveness.
Strategic Recommendations for Improvement
The "Trade Watch" report advocates for tariff reductions to enhance India's competitive edge in global markets. Subrahmanyam noted that India's trade composition is heavily skewed, concentrated in a limited range of products that do not align with global trade patterns. He remarked, "Our trade is very, very unbalanced. It is concentrated in a few products — and in the wrong products." To address this imbalance, he called for greater diversification and productivity-led growth.
Official Statements and Future Directions
Subrahmanyam indicated that the Indian government is in the final stages of launching the National Manufacturing Mission, aimed at improving industrial competitiveness and diversifying the manufacturing base. He also mentioned ongoing discussions regarding trade reforms, hinting at potential announcements by Diwali. "India has room to expand its trade deficit if required to support industrial growth but must focus on improving competitiveness rather than shielding sectors through tariffs," he stated.
Criticism and Opposition
Despite the optimistic outlook, some critics argue that India's reliance on China poses risks, particularly amid rising global trade tensions. The doubling of tariffs by U.S. President Donald Trump on Indian goods has strained bilateral relations, prompting calls for a more cautious approach to trade dependency.
Verbatim Quotes
- "If you don't focus on Asia, if you are not able to sell much to China, it is pointless because it's a $15 trillion economy. You can't avoid that economy." — B.V.R. Subrahmanyam, CEO, NITI Aayog
- "Our trade is very, very unbalanced. It is concentrated in a few products — and in the wrong products." — B.V.R. Subrahmanyam, CEO, NITI Aayog
Conclusion
India's trade strategy must adapt to the evolving global landscape, particularly by enhancing its engagement with China. As the country seeks to diversify its export base and improve competitiveness, the recommendations from NITI Aayog's report will be crucial in shaping India's trade policies moving forward.
