‘India must reduce dependence on China for certain critical inputs’

NEW DELHI: NITI Aayog vice chairman Suman Bery on Sunday said that India’s focus should not be on overall trade deficit with China, instead it should be on reducing New Delhi’s dependence on Beijing for certain critical inputs.

According to Bery, the right response is to diversify to other sources of supply for critical inputs including active pharmaceutical ingredients (APIs) and supply chain for renewables.

China is the world’s largest producer and exporter of APIs and many of the Indian companies depend on imports of the ingredients to produce various formulations. “India’s focus should not be on the trade deficit with China. It should be on our dependence on China for certain critical inputs,” he said.

He was asked what measures India should take to reduce its rising trade deficit with China. He said it is unfortunate that in the last seven years, the larger powers, both the US and China have chosen to weaponise trade interdependence.

“It is unfortunate that China, which is a very competitive source of intermediate goods, is also a power with which we have some military difficulty that puts a different kind of complexion,” he said. Indian and Chinese troops clashed along the Line of Actual Control (LAC) in the Tawang sector of Arunachal Pradesh on December 9 and the face-off resulted in “minor injuries to a few personnel from both sides.

According to recent data released by the Chinese customs, the trade between India and China touched an all-time high of $135.98 billion in 2022, while New Delhi’s trade deficit with Beijing crossed the USD 100 billion mark for the first time despite frosty bilateral relations. To reduce the trade deficit with China, Bery suggested that India should formulate a sector-by-sector strategy.

Bery said Chinese enterprises are looking for markets and they want to hold on to the Indian market. “And to do that, they should be prevented from being monopolists, by the way,” Bery emphasised.

China’s exports to India climbed to $118.5 billion, a year-on-year increase of 21.7 per cent. During 2022, China’s imports from India dwindled to $17.48 billion, a year-on-year decline of 37.9 per cent.