INDIA’S BILATERAL TRADE WITH CHINA- EMPIRICAL STUDY BASED ON TRADE INTENSITY INDEX & TRADE RECIPROCITY INDEX

Abstract

This paper is an attempt to examine and compare the bilateral relationship between India and China. It analyses the trends in trade and the major composition of commodities being traded between India and China during the period (2008-2017). Annual Growth Rate (AGR), Combined Annual Growth Rate (CAGR), Trade Intensity Index (TII), and Trade Reciprocity Index (TRI) have been used in order to analyse the bilateral trade between India and China. The present study reveals that India imports 3 to 4 times more than it exports to China whereas overall trade between India and China also increased over the years specially in the area of import as compare to India’s total trade to the world. However, the top ten commodities that have been dominating in India’s trade with China are: Ores, Cotton, Copper and articles, Organic chemicals, Electrical machinery & equipment, nuclear reactors, etc. Trade Intensity Index reveals there is serious unbalanced trade relationship between India and China from India’s point of view and India need to take productive steps for minimising unbalanced trade balance. Whereas, TRI index also reveals that India is stepping towards unbalanced trade with China as the import indices keep on increasing in comparison to export indices and therefore, balance of trade results unfavourable which requires India to rethink and revamp its export and import policy.