India's Trade Dependence On China & EU Grows Despite Efforts To Cut Reliance: UNCTAD Report

New Delhi, Apr 1 (KNN) India's trade dependence on China and the European Union increased by 1.2 per cent in 2023, despite government efforts to reduce reliance on Chinese imports through schemes like the Production-Linked Incentive (PLI) and Quality Control Orders (QCOs).

This is according to estimates by the United Nations Conference on Trade and Development (UNCTAD) based on national statistics.

At the same time, India's trade dependence on Saudi Arabia decreased by 0.6 per cent, the UNCTAD data showed.

The UNCTAD report noted that while geographic proximity of global trade has remained relatively stable over the last two years, there has been "a noticeable rise in the political proximity of trade" since late 2022.

This suggests countries are favouring trade partners with similar geopolitical stances.

One major shift highlighted was Russia's increasing trade dependence on China amid the ongoing Russia-Ukraine war.

Russia's reliance on China surged by 7.1 per cent as its trade with the European Union dropped 5.3 per cent.

This was largely driven by Russia diverting oil exports from the EU to China and India after sanctions.

Chinese customs data indicates two-way Russia-China trade hit a record USD 240 billion in 2023.

In contrast, the United States managed to cut its trade dependence on China by 1.2 per cent last year while increasing reliance on the EU and Mexico.

Overall, the value of global merchandise trade contracted by around 5 per cent or USD 1.3 trillion in 2023, with declines across sectors like apparel, chemicals, and textiles.

However, trade in services grew about 8 per cent or USD 500 billion.

The pharmaceutical, transportation equipment, and electric vehicle sectors were among the few that saw trade value increases.

(KNN Bureau)