India's Path to Self-Reliance Amid China's Export Easing

In a significant development, China has decided to ease export restrictions on crucial commodities such as fertilizers, rare earths, and tunnel-boring machines to India. While this move has been welcomed, experts from the Global Trade Research Initiative (GTRI) warn that India's increasing trade deficit with China underscores the urgent need for self-reliance.

Previously, China imposed restrictions on critical minerals like gallium and germanium, disrupting India's electronics and electric vehicle sectors. This created a notable impact when Chinese battery giant CATL withdrew engineers from Foxconn's Chennai plant. Even with the recent relaxation, India's trade deficit with China has surged to an alarming USD 100 billion, complicating matters further amid China's support for Pakistan in recent conflicts.

The GTRI report highlights the structural nature of the trade imbalance, revealing that over 70% of India's needs in several sectors are met by Chinese imports. Laptops and flat panel displays are dominated by Chinese products, exacerbating India's weakened position in bilateral trade. To combat this, GTRI recommends implementing a reverse-engineering program and developing an open-access database of blueprints for critical imports. The initiative emphasizes that Beijing's recent gesture is tactical, and real stability depends on boosting domestic manufacturing and supply chain resilience.

(With inputs from agencies.)