India Has Trade Surplus With 151 Countries, But Deficit With China Looms Large: GTRI

India achieved a trade surplus with 151 countries, including key partners like the US and the Netherlands, while registering a trade deficit with 75 nations, such as China and Russia, in the first half of this year, according to the Global Trade Research Initiative (GTRI).

The GTRI highlighted that while India need not be overly concerned about the trade deficit arising from essential imports like crude oil and coal, it must focus on reducing imports of industrial goods, especially from countries like China, as these pose a threat to India's economic sovereignty.

"Between January and June 2024, India had a trade surplus with 151 countries, accounting for 55.8 per cent of its exports and 16.5 per cent of its imports, totalling USD 72.1 billion," GTRI said in a report.

The largest surpluses were recorded with the USA (USD 21 billion) and the Netherlands (USD 11.6 billion) during this period.

Conversely, India experienced a trade deficit with 75 countries, representing 44.2 per cent of its exports and 83.5 per cent of its imports, leading to a USD 185.4 billion deficit, significantly higher than the overall trade deficit. This situation underscores the importance of reducing dependence on specific imports and bolstering domestic production.

The analysis also revealed that India's trade deficit exceeded USD 1 billion with 23 out of the 75 countries. The top five countries contributing to this deficit were China (USD 41.88 billion), Russia (USD 31.98 billion), Iraq (USD 15.07 billion), Indonesia (USD 9.89 billion), and the UAE (USD 9.47 billion).

Among the remaining 18 countries with a trade deficit exceeding USD 1 billion were Saudi Arabia (USD 9.43 billion), Switzerland (USD 8.46 billion), South Korea (USD 6.93 billion), Japan (USD 6.13 billion), and several others.

The GTRI emphasised that India should not be overly concerned about the trade deficit with 11 countries primarily exporting crude oil, petroleum products, and coal, such as Angola, Iraq, Saudi Arabia, Australia, and Nigeria.

However, a cautious approach is advised concerning the trade deficit with four countries that primarily export gold, silver, and diamonds to India — Peru, Switzerland, the UAE, and Hong Kong — especially following recent tariff cuts on these commodities.

It may be recalled that the Union Budget 2024-25 had announced a sharp cut in import duties on gold and silver, from 15 per cent to only 6 per cent.

Regarding China, the report stated that between January and June 2024, India exported USD 8.5 billion worth of goods to China while importing USD 50.4 billion, resulting in a trade deficit of USD 41.9 billion. This imbalance makes China India's largest trade deficit partner, with 98.5 per cent of imports from China being industrial goods.

"China accounts for 29.8 per cent of India's industrial goods imports. India must invest in deep manufacturing to cut dependence on the import of critical industrial products from China," GTRI founder Ajay Srivastava said.