Introduction

Bilateral trade between India and China soared to a record $136.2 billion in 2023, marking a 1.5% year-on-year increase.

Why discuss this?

Trade Deficit Concerns: India has been grappling with a significant trade deficit in favor of China, exceeding $100 billion in 2022. Efforts to address this deficit remain a priority for India.
Diplomatic Vacancies: The absence of a Chinese Ambassador to Delhi for over 16 months and the lack of direct flights between the two countries underscore persistent diplomatic challenges.
Panchsheel Agreement Anniversary: The upcoming 70th anniversary of the India-China Panchsheel Agreement serves as a reminder of the importance of peaceful coexistence and adherence to international norms.

Key Trading Partner: China stands as India’s largest trading partner, with significant exchanges in various commodities.
Major Imports from China: Electronic equipment, machinery, organic chemicals, and iron and steel are among the primary commodities imported from China into India.
Major Exports to China: Indian exports to China include cotton, gems, copper, ores, organic chemicals, and machinery.

Boycotts and Labeling Initiatives: Indian businesses are increasingly boycotting Chinese products, while the government mandates country of origin labelling for products sold online.
Ban on Chinese Apps: The Indian government has banned several Chinese mobile applications, citing concerns over national security and data privacy.

Trade Deficits and Economic Realities: Complete boycotts may not be feasible as they could adversely affect Indian consumers, producers, and exporters.
Impact on Pharma Sector: The pharmaceutical sector, heavily reliant on Chinese imports for raw materials, could face significant disruptions.
Minimal Impact on China: UNCTAD data suggests that a complete boycott would have limited repercussions on China’s economy.
Integration and Policy Credibility: India’s integration with China and the potential fallout on policy credibility are crucial considerations.

Promoting Self-Reliance: India’s focus on self-reliance aims to bolster domestic capabilities and enhance competitiveness in global trade.
Government Support and Ecosystem Development: Government initiatives under the “Atmanirbhar” banner should prioritize industries needing support for self-reliance.
Addressing Cost Disadvantages: Long-term strategies must address the cost disparities in Indian manufacturing to reduce dependence on imports.
Conflict Resolution: Continued efforts towards conflict resolution and adherence to international norms will be crucial in navigating the complexities of this strategic partnership.

	Details
Origin	Joint statement issued by PM Nehru during Chinese premier Zhou Enlai’s visits to India in 1954 Based on Westphalian norms of State Sovereignty
Principles	Mutual respect for sovereignty and territorial integrity Mutual non-aggression Mutual non-interference in internal matters Equality and mutual benefit Peaceful co-existence
Relevance	Preserving independence, sovereignty, and territorial integrity Reducing regional tensions and threats Establishing India as an equal partner Providing a framework for engagement Portraying India as a robust democracy Facilitating regional cooperation and connectivity