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India-China Trade and Economic Relations

  1. Bilateral Trade

The rapid expansion of India-China bilateral trade since the beginning of this century propelled China to emerge as our largest goods trading partner by 2008, a position which China continues to hold today. Since beginning of the current decade, bilateral trade between the two countries recorded exponential growth. For last two years, the bilateral trade has registered robust two digit growth. For the year 2017, bilateral trade increased by 20.3% year-on-year to reach US$ 84.41 billion, with India’s exports rebounding to US$ 16.34 billion registering positive growth of 38.9% year-on-year after 3 years’ continuous decline. India’s imports from China grew by 16.5% to US$ 68.03 billion. Trade figures for the past few years are as under:

( Figures in $ Bn)


India’s Export to China


India’s Import from China


Trade Imbalance

Total Trade


































(Source: General Administration of Customs, China)

Composition of Trade: Composition of major commodities of India’s trade with China for year 2017 is given below:

India Exports

India Import

Natural Pearls, Precious Stones & Metals
Metal Ores, Slag & Ash
Cotton including Yarn & Woven Fabric
Copper & Articles
Organic Chemicals
Salt; Sulfur; Earth & Stone; Lime & Cement Plaster

Electrical Machinery & Equipment
Computers, Servers, Printers, Air conditioners, Compressors, Machinery & parts
Organic Chemicals
Plastics & Articles
Iron & Steel

(Source: General Administration of Customs, China)

Trade Deficit: While India-China trade grew exponentially, it has also led to the biggest single trade deficit we are running with any country. In 2017, the widening trade deficit reached to US $51.72 billion. The growth of trade deficit with China could be attributed to two factors: narrow basket of commodities, mostly primary, that we export to China and market access impediments for most of our agricultural products and the sectors where we are competitive in, such as pharmaceuticals, IT/IteS, etc. Our pre-dominant exports have consisted of cotton, copper and diamonds/ natural gems. Over time, these raw material-based commodities have been over-shadowed by Chinese exports of machinery, power-related equipment, telecom, organic chemicals, and fertilizers.
The Five Year Development Program for Economic and Trade Cooperation between the People’s Republic of China and the Republic of India was adopted during the visit of China’s President to India during September 2014 to address the serious issue of trade imbalance and facilitation of market access for more Indian products in China. In 2018, market access was achieved for export of Indian Non-Basmati rice, rapeseed meal, fishmeal and fish-oil. The Embassy also took proactive steps and organized various Buyer Seller meets to bring Indian exporters and Chinese importers on same platform. In last six months we hosted events such as oil meals, rice, pharmaceuticals, tea, sugar and tourism and one RBSM on grapes in Mumbai/Nashik.

  1. Bilateral Investment

Growth in bilateral investment has not kept pace with the expansion in trading volumes between the two countries. While both countries have emerged as top investment destinations for the rest of the world, mutual investment flows are yet to catch up. According to Ministry of Commerce of China, Chinese investments in India between January-December 2017 were to the tune of US$289.98 million and Cumulative Chinese investment in India till the end of December 2017 amount to US$4.747 billion. Cumulative Indian investment in China till September 2017 is US$ 851.91 million.  However these figures might be misleading as the data do not capture investment routed through third country like Singapore, Hong Kong etc. especially in sectors such as start-ups etc. which has seen significant increase in Chinese investment. 

  1. Institutional Bilateral Economic and Commercial Dialogue Mechanisms

India-China Economic and Commercial Relations are shaped through various dialogue mechanism such as

A. Joint Group on Economic Relations, Science and Technology (JEG), led by the Commerce Ministers of both sides. Joint Economic Group (JEG) was established in 1988 during the visit of Prime Minister Rajiv Gandhi to China, to discuss trade cooperation issues.  So far 11 JEGs were held with the last one in Delhi in March 2018.  During the 9th JEG, the two sides also set up three working groups on Economic and Trade Planning Cooperation (ETPC), Trade Statistical Analysis (TSA) and Service Trade Promotion (or Trade in Services – TIS)

B. Strategic Economic Dialogue (SED) was established during the visit of Chinese Premier Wen Jiabao to India in December 2010, to discuss macro-economic cooperation.  So far 5 SED meetings have taken place with the last one held in Beijing in April 2018.  There are 5 Working Groups under SED:  Infrastructure, Environment, Energy, High Technology and Policy Coordination.  The SED is co-chaired by Vice-Chairman NITI Aayog and Chairman, Chinese National Development and Reforms Commission (NDRC). During 5th SED both sides agreed to create one more working group on Pharmaceutical.

C. The NITI Aayog – Development Research Centre of China (DRC) Dialogue was established pursuant to the MoU signed during the visit of Prime Minister Narendra Modi to China in May 2015, to discuss global economic cooperation issues.  Vice-Chairman NITI Aayog leads the India delegation while President (Minister-level) of DRC of China leads the Chinese delegation.  The fourth dialogue was held in Mumbai from on 1 November 2018.

D. India-China Financial Dialogue are held in accordance with the MoU signed during Chinese Premier Wen Jiabao’s visit to India in April 2005. The eighth India-China Financial Dialogue was held in Beijing on 19 August 2016 which was co-chaired by Secretary DEA. The Indian side expressed concern over the problems being faced by the State Bank of India in invoking counter guarantee from some Chinese banks. The Ninth Financial Dialogue is proposed to be held in India.

E. Other Institutional Mechanisms: Some of the other institutionalized dialogue mechanisms between the two countries include the JWG on Collaboration in Skill Development and Vocational Education, Joint Working Group on Information and Communication Technology & High-Technology, Joint Working Group on Industrial Park Cooperation, Joint Study Group and Joint Task Force on Regional Trading Agreement (RTA), India-China Joint Working Group on Agriculture, India-China Joint Working Group on Cooperation in Energy and the Joint Study Group on BCIM Economic Corridor.

List of Institutional Dialogues and Important Meetings held in 2018





11th Meeting of JEG

26 March, New Delhi


5th SED Meeting

13-14 April, Beijing


NDB Board of Governors Meeting

28-29 May, Shanghai


AIIB Board of Governors Meeting

22-26 June, Mumbai


4th NITI Aayog-DRC Dialogue

31 October- 01 November, Mumbai

  1. Banking Sector Cooperation

Indian Banks in China: Many Indian banks have established their presence in mainland China in the last few years. The following Indian Banks have either branch or representative offices in China:
State Bank of India (Shanghai and Tianjin),
Canara Bank (Shanghai),
Axis Bank (Shanghai),
Bank of Baroda (Guangzhou),
ICICI (Shanghai)
Bank of India (Shenzhen)
Union Bank (Beijing, Shanghai)
Indian Overseas Bank(Guangzhou)
At present, the State Bank of India is the only Indian bank to have authorization to conduct local currency (RMB) business at its branch in Shanghai, while the branches of other banks conduct business in foreign currency. However, except SBI, ICICI and Axis Bank in Shanghai, all other bank branches and rep offices are in the process of closure for commercial reasons.
Chinese Banks in India: In early 2011, Industrial and Commercial Bank of China (ICBC) secured a license to start banking operations in India. ICBC inaugurated their Mumbai branch on September 15, 2011. This marked the opening of the first branch of a mainland Chinese bank in India. Recently, Bank of China (BoC) received banking license from RBI in July 2018.
Multilateral Banks
Asian Infrastructure Investment Bank (AIIB) is headquartered in Beijing and India became its founding member by signing Agreement of Association (AoA) along with 57 other prospective founding member countries on 29th June 2015. India is the second largest shareholder with approx 8% shareholding and has a single member constituency in the Board. The bank conducts its business through quarterly BoD meetings and annual AGMs.  India hosted the third AGM in Mumbai in June 2018.

New Development Bank (NDB) is headquartetred in Shanghai and Mr K.V.Kamath took charge as the President of the NDB. 2nd BoG meeting was held in New Delhi between 31 March and 2 April 2017. The third BOG meeting was held in Shanghai on 26th March 2018. The initial authorized capital of the Bank is USD100 billion of which USD 50 billion would be subscribed initially by founding members (BRICS) who shall have equal shareholding initially.

  1. Tourism & Films

China has the world’s largest outbound tourism industry. In 2017, more than 130 million outbound tourists traveled to different parts of the world and spent more than US$ 115 Billion. Tourism to India, however is still below potential. In 2017, India received around 250,000 Chinese tourists. To enhance people to people cooperation, the year 2015 was celebrated as “Visit India Year in China” and year 2016 was celebrated as ‘Visit China Year in India’. The renewal of the bilateral MoU on Cooperation in Tourism Sector was completed in May 2015. In 2018, Mr KJ Alphons, Minister of State for Tourism (IC) visited China in August 2018 and held roadshows in Beijing, Wuhan, Guangzhou and Shanghai. The roadshows were highly attended and generated a lot of interest from Chinese Tour operators.

India-China MoU on Audio-visual coproduction was signed during Chinese President Xi Jinping’s visit to India in September 2014 and two Indian movies (PK and Dhoom3) were released in 2015. “Xuan Zang” was the first co-production film between India and China, featuring popular Chinese Huang Xiaoming. This film released in 2016 was submitted as a contender to represent the mainland China for Best Foreign Language Film at the 89th Academy Awards in 2017. In 2017, “Kungfu Yoga”,  featuring Jackie Chan and “Buddies in India” were released. In recent years, Indian movies such as Dangal, Secret Superstar, Hindi Medium, Toilet etc. registered great success at Chinese box office.

  1. Important Agreements / Traeties

Double Taxation Avoidance Agreement (DTAA):  India and China signed the DTAA on 18 July 1994 and the Agreement came into force on 21 November 1994.  Both the countries have agreed to revise the DTAA in its entirety. The revised DTAA has been signed in May 2018.

  1. Indian Companies in China

With the growth in bilateral trade between India and China in the last few years, many Indian companies have started setting up Chinese operations to service both their Indian and MNC clientele in China. Indian enterprises operating in China either as representative offices, Wholly Owned Foreign Enterprises (WOFE) or Joint Ventures with Chinese companies are into manufacturing (pharmaceuticals, refractories, laminated tubes, auto-components, wind energy etc.), IT and IT-enabled services (including IT education, software solutions, and specific software products), trading, banking and allied activities. While the Indian trading community is primarily confined to major port cities such as Guangzhou and Shenzhen, they are also present in large numbers in places where the Chinese have set up warehouses and wholesale markets such as Yiwu in Zhejiang. Most of the Indian companies have a presence in Shanghai, which is China’s financial center; while a few Indian companies have set up offices in the capital city of Beijing. Some of the prominent Indian companies in China include Dr. Reddy’s Laboratories, Aurobindo Pharma, Matrix Pharma, NIIT, Bharat Forge, Infosys, TCS, APTECH, Wipro, Mahindra Satyam, Dr. Reddy’s, Essel Packaging, Suzlon Energy, Reliance Industries, SUNDARAM Fasteners, Mahindra & Mahindra, TATA Sons, Binani Cements, etc.

  1. Chinese Companies in India

According to information available with the Embassy of India, more than 100 Chinese companies have established offices/operations in India. Many large Chinese state-owned companies in the field of machinery and infrastructure construction have won projects in India and have opened project offices in India. These include Sinosteel, Shougang International, Baoshan Iron & Steel Ltd, Sany Heavy Industry Ltd, Chongqing Lifan Industry Ltd, China Dongfang International, Sino Hydro Corporation, etc. Many Chinese electronic, IT and hardware manufacturing companies are also having operations in India. These include Huawei Technologies, ZTE, TCL, Haier etc. A large number of Chinese companies are involved in EPC projects in the Power Sector. These include Shanghai Electric, Harbin Electric, Dongfang Electric, Shenyang Electric etc. In recent years, Chinese mobile companies have achieved remarkable growth in India. Xiaomi, became largest mobile handset selling company in the 3rd quarter of 2017. Today, Chinese mobile handset companies Xiaomi, Vivo and Oppo occupies nearly 40% of Indian mobile handset market.


Last Updated: 07/01/2019