US becomes India's largest trade partner, is India-China trade decoupling?

JUNE 22: India's Ministry of Commerce and Industry latest data shows that the US has become India's largest trading partner, exceeding China with bilateral trade reaching USD 119.42 billion. From the breakdown data, India's trade exports to the US increased from about USD 51.62 billion in the previous fiscal year to USD 76.11 billion, while imports increased from about USD 29 billion to about USD 43.31 billion. India's major exports to the US include polished diamonds, pharmaceutical products, jewellery, light oil and petroleum, frozen shrimp, cosmetics, and more. India's imports from the United States are mainly oil, liquefied natural gas, gold, coal, recycled products and scrap iron, large almonds, etc.

The data also shows that the bilateral trade volume between India and China in the 2021-2022 fiscal year is about USD 115.42 billion, an increase of about 1/3 from the USD 86.4 billion in the previous fiscal year. Among them, India's exports to China are about USD 21.25 billion, and its imports to China are about USD 94.16 billion. It is reported that the trade volume of imported goods from China is increasing, and the top 100 imported items each have an import value of more than USD 100 million. Indian experts believe that India's dependence on China for imports of manufactured goods shows no sign of easing.

The statistical data of China and India are different, which leads to differences in the trade volume figures announced by each of them. Chinese data shows that China is India's largest trading partner from 2013-2014 to 2017-2018 and 2020-2021. In addition to China, the US and the UAE were once India's largest trading partners. China has not always been India's largest trading partner, and this is not the first time that the US has become India's largest trading partner. For a long time, China and India have maintained a relatively large trade deficit, while India has maintained a trade surplus with the US. Therefore, India has always regarded the US as an important export market.

In the light of the above facts, it is pertinent to examine what really happened to the US-India trade? Will Chinese products decrease in India? Will China-India trade and economy weaken? India imports items ranging from small screws to large TVs, refrigerators and mobile phones are mostly Chinese products. These Chinese products are of high quality and low price and are almost unmatched by other countries. They are very popular among Indian consumers, and even the utensils for Indians to worship gods and various decorative flowers, bags, shoes and hats, etc. come from China. China is often used by the Indian media to illustrate the way Chinese goods "invade" India. In particular, mobile phones and consumer electronics are the most obvious because of their cost-effectiveness and affordability. Whereas, most of the US exports to India are energy products and agricultural products, China's exports to India are mostly manufacturing products, giving the impression that Chinese products are occupying the Indian market. But, in more invisible situations, such as in emerging information fields, the US dominates. Such as e-commerce Amazon, search engine Google, social media Facebook, Twitter and WhatsApp, etc.

The continuous strengthening of US-India trade relations is due to both the epidemic and India's attempt to "decouple" from China. However, the security factor occupies a critical position, that is, with the help of the "China fear" mentality at home and abroad, India has accelerated the substitution of Chinese industries. India wants to leave China aside, attract capital from the US and other countries, undertake high-tech enterprises, and deeply participate in the global supply chain to promote the great development of India's domestic manufacturing industry. However, at present, the fundamentals of China-India economic and trade cooperation have not changed.

ANI