India’s robust double-digit exports growth to China, coupled with sharp contraction in imports, nearly halved the trade gap between the two trading partners in the first five months of the current fiscal year (2020 - 21, or FY21) over the same period of 2019 - 20 (FY20).

The restriction on imports from China has shrunk India’s trade deficit with the neighbouring country to $12.6 billion between April and August of FY21, from $22.6 billion in the year-ago period.

India’s trade deficit with China stood at $23.5 billion in the corresponding period of 2018 - 19 and at $26.33 billion in 2017 - 18.

India exports to China saw sustained double-digit growth for the fourth straight month in August, led by eightfold rise in iron and steel shipments. In the April - August period, outbound shipments to Beijing expanded 27 per cent, compared to 9.5-per cent expansion in the same period last year.

In the first five months of this year, India’s imports from China fell by 27% to $21.5 billion, a 21% drop in August alone.

India’s exports to China grew 15 per cent in August, with shipments worth $1.68 billion, revealed the data by the Department of Commerce. Exports growth to Beijing peaked in June at 78 per cent and expanded 48 per cent in May and 23 per cent in July.

India’s exports basket to China mainly accounted for iron and steel, which rose 833 per cent to $1.8 billion till August this year, compared with $192 million last year. China accounted for 35 per cent of India’s iron and steel outbound shipments in the first five months of the fiscal year, against 5.3 per cent in the corresponding period last year.

China also made up for 90 per cent of India’s exports of iron ore worth $1.6 billion, a fourth of exports of organic chemicals worth $809 million, and 16 per cent of exports of marine products worth $351 million during the five months.

The import basket is largely dominated by telecom instruments, organic chemicals, and industrial equipment for dairy, etc.

Among India’s top five export partners, China is the only destination showing growth. Exports to the US are down 24.6 per cent. In the case of UAE, they are down 59.2 per cent. Shipments to Singapore also contracted 24.2 per cent and 26.7 per cent, respectively.