Implications of huge Trade deficit

  1. India in spite of being net buyer of Chinese products isn’t at great advantage to encash it against China in other policy matters. That is because though China is India’s biggest trade partner, India constitutes only 4% Chinese export market. Any measure to impose import duty would have limited impact on its trade.
  2. India has enormous security implication for being highly dependent of Chinese electronics goods. The recent decision by India to leave out Huawei in 5g trials is an affirmation of the above fact.
  3. Bleeding of Indian small scale industries which produced products like Agarbattis, toys etc. due to dumping by China.