India and China have established considerable economic dependence on one another; however, this dependence is unequal with a extremely large trade deficit in India’s favor. Below is the analysis of the same.

Important Contributing Factors to the Imbalance in Trade:

Asymmetric Trade: India is exporting only raw material, and agricultural products to China and importing a wide range of hs code products from China. This acts to provide a massive boost towards the realization of the deficits because the flow of trade is not evenly balanced.

-Strong Chinese Manufacturing Sector: India finds China’s manufacturing base strengthened by its government and large enough to offer inexpensive production of the goods hence attractive to India consumers.

-Limited Access for Indian Exports: There are other forms of hurdles, which includeNon-tariff barriers;Tough quality requirements;Restricted entry for some sectors of India into China.

-Dependence on Import from China: An increasing number of Industries from India rely on the import of all intermediate products and parts from China, which in turn means that India relies on its northern neighbour.

Measures to Reduce the Trade Deficit:

Trade Promotion

Promotion of Exports
Diversification: Promote diversification of export products towards higher value added products including pharmaceutical, IT services and Engineering goods to china.
\end{enumerate}-Market Access: Notably establish a better access to the Indian products in the market in China under bilateral understanding as well as Notes and dismantling of the non-tariff barriers.

-Quality Upgrade: Indian product would gain increased quality and effectiveness vis à vis the Chinese standards and consumer demand.

Increased Domestic Manufacturing:

“Make in India”: Reduce imports from China by additional home production with the help of measures like “Make in India”.
-Support Domestic Industries: Encourage and support the domestic industries needed to become competitive so as to cut their reliance on Chinese products.

Trade Policy Initiatives:
-Anti-dumping Duties: Impose anti-dumping duties on Chinese imports that are priced lower than the fair price to safeguard the domestic industries.
-Tariff and Non-Tariff Barriers: Apply calibrated trade restrictions that may help balance the trade interests with the protection of domestic industries.

-Regional Trade Agreements: Seek ways to enhance regional trade integration through agreements like the Regional Comprehensive Economic Partnership (RCEP) to enhance market access for Indian goods in other Asian markets.

It is worth noting that:
The reduction of the trade deficit with China would require a multi-pronged approach and would take time to bear fruit.

-It is very essential to maintain a balanced approach that encourages economic cooperation while simultaneously redressing the issues of trade imbalances and national security.

The current geopolitical tensions between India and China add another dimension to the economic relationship.

By combining these measures, India can work towards reducing its trade deficit with China, increasing its economic competitiveness, and creating a more balanced and mutually beneficial trade relationship.