An Analysis of India’s Export Performance with China
| Author | Surinder Kumar Singla |
| DOI | 10.1177/0015732515589443 |
| Date | 01 August 2015 |
| Published date | 01 August 2015 |
| Subject Matter | Commentary |
An Analysis of India’s
Foreign Trade Review
50(3) 219–230
Export Performance
©2015 Indian Institute of
Foreign Trade
with China
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0015732515589443
http://ftr.sagepub.com
Surinder Kumar Singla1
Abstract
India and China are two rapidly emerging economies in the world. With their
high growth rates and huge markets, these two Asian giants have attracted the
attention of international business mangers to take a fresh look at the rapidly
emerging opportunities in the two countries. Today, India–China relations
are conspicuous by the fast rise of their merchandise trade, which has already
crossed US$ 42 billion in 2009–2010. China has already become India’s second
largest trade partner only after UAE. Besides this, China has also become one
of the most favourite destinations for Indian exporters. China’s share in India’s
global exports has increased rapidly from just 0.10 per cent in 1990–1991 to
6.47 per cent in 2009–2010. However, this growth of Indian exports to China
has not been equally distributed over various commodity groups. In fact, Indian
exports to China are mainly dominated by natural resource-based raw materials
or semi-manufactured products which are not considered to be healthy from the
Indian point of view. Hence, there is an urgent need to add some technologically
advanced products in the export basket to China. According to the need of the
time, the present study examines the various trends that occurred in growth and
structure of Indian exports to China during the last two decades.
JEL: F10, F14, Q37
Keywords
India, China, exports, concentration index, ores, slag and ash
Introduction
Exports have assumed a place of paramount importance in the development
process of an economy and played a major role in generating investible
surpluses and in financing imports. The greater exports happen in the situation
1 Assistant Professor, Centre for Economic Studies, Central University of Punjab, Bathinda, Punjab.
Corresponding author:
Surinder Kumar Singla, H. No. 205/17-A, Mahesh Nagar, Dhuri 148024, District Sangrur, Punjab, India.
E-mail: singlasoni@gmail.com
220
Foreign Trade Review 50(3)
of liberalization of imports. This would not only result in greater competition
for a highly protected domestic industry and give greater choice to those who
previously compelled to use domestically produced goods but would also reduce
the constraining effect of scarce inputs on the growth of the more efficient firms
(Wolf, 1982). Thus, export performance of a country plays a decisive role in her
development process. The liberalization policies adopted by India brought
major changes in growth, composition and direction of her exports. Though
India’s share in world exports is still low, yet, in absolute terms, it is consistently
rising. Thus, the need for augmenting exports is always recognized by the planning
authority of India.
One very important feature of India’s merchandise trade is its growing ties
with China. The value of India–China trade, during the last two decades, grew
at a fabulous rate. Today, India–China relations are conspicuous by the fast rise
of trade, which has already crossed US$ 42 billion in 2009–2010. China has
already become India’s second largest trade partner only after UAE. Thus, the
importance of India and China in international business is becoming apparent
with each passing day. In fact, India–China trade is extremely a fascinating
subject for the simple reason that both the countries are close neighbours, having
huge populations and enjoy unbounded cultural affinity. Any attempt for
strengthening trade relations or economic ties between these two countries
would, therefore, be most rewarding for their rapid development. Moreover,
since 1991, China has emerged as one of the major destinations for Indian
exports. During 1991–2010, China’s share in India’s global exports increased
very rapidly. Though Indian export basket to China is dominated by few items
hitherto, even then many new items have also been added in this basket. But, the
most worrying point is that India is exporting too much amount of her natural
resources to China, which is quite alarming for the Indian policy makers. Hence,
the present study examines the performance of India’s exports to China via
exploring their growth and structure.
The plan for the article is as follows: the first section provides the basic intro-
duction and general context of the problem. The second section presents the
growth of India’s merchandise trade with China. In the third section, a compre-
hensive picture of India’s exports growth and structure with China has been
presented. Keeping in view the dominant role of ores, slag and ash in India’s
export basket to China, the fourth section tries to answer the question why is
India exporting too much amount of this commodity to China? The fifth section
compares the extent of concentration in Indian export basket to China vis-à-vis
Chinese export basket to India. The sixth section comprises the summary and
conclusion. The present study is based on secondary data which have been
collected mainly from Monthly Statistics for Foreign Trade of India; Statistics
of Foreign Trade of India by Countries, Directorate General for Commercial
Intelligence and Statistics (DGCI&S), Kolkata; and United Nations (UN)
Commodity Trade Statistics. The analysis has been made for the period from
1990–1991 to 2009–2010.
Singla
221
Growth of India–China Merchandise Trade
India and China are two ancient civilizations in the world. Economic relations
between the two countries, in the fields of trade, date back to very ancient times
when merchant adventurers used to cross the barriers of mountains, seas and
deserts in search of markets in either country (Ganguli, 1956). The most signifi-
cant aspect of the ancient contacts was the establishment of Buddhism in China.
Indian monks acted like bees carrying cultural pollen to China. Apart from the
development of religion and philosophy, they also promoted the advancement of
phonology, astronomy, medicine, chemistry and physical exercise in China
(Acharya, 2000). Thus, historically, economic interactions between India and
China have been much less importance than their cultural interactions. Trade and
commerce and also cultural contacts flourished between the two countries via
‘Silk Road’. This road played an important role in reconstructing the history of
cultural and economic affinity between India and China. Chinese merchants used
the Silk Route to sell silk, tea, porcelain and other goods to India and took from
India pepper, perfume, jewels, horses, etc. (Singh, 2005).
After independence, the first decade of relations between the People’s Republic
of China and the newly independent Indian government was peaceful and harmo-
nious. In 1954, the two countries signed the Sino-Indian Agreement on Trade.
However, this trade agreement between the two countries expired in 1962 due to
the Sino-Indian war. The bilateral relations improved gradually since 1976 when
diplomatic relations were restored. With the resumption of diplomatic relations,
India–China economic relations proceeded rapidly.
In the late 1980s, China marched ahead on the economic reforms front and dras-
tically changed her foreign trade regime. The reforms greatly promoted the develop-
ment of China’s foreign trade, which, in turn, contributed to rapid economic
development in the country (Yin, 2004). India–China relations...
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