Reasons for Huge Trade Deficit

It is clear that there is increasing trade deficit between the countries which has only accelerated post Covid.

  1. China’s dominance in low cost manufacturing.
  2. China is well integrated in the global supply chain.
  3. India’s poor manufacturing capacity underpinned by lack of reforms in Land, labor and capital utilisation.
  4. The recent COVID issue has permanently damaged many MSME’s in India, making it difficult for the manufacturing companies to source intermediate products.
  5. To protect domestic players from cheap imports, India has imposed anti-dumping duty on as many as 99 Chinese products including Chemicals, petrochemicals, fibre, yarn, pharmaceutical, rubber etc.