EVEN as several anti-Chinese lobbies continue to pressurise the government to impose curbs on imports from its neighbouring country, India’s trade deficit with China continues to soar.

Last week, the Indian government revealed that its trade deficit with China had shot up to $52.69bn in financial year 2015-16, as against $48.48bn in the previous fiscal (and a mere $1.1bn in 2003-04).

“Increasing trade deficit with China can be attributed primarily to the fact that Chinese exports to India rely strongly on manufactured items to meet the demand of fast expanding sectors like telecom and power,” Nirmala Sitharaman, the commerce minister, said last week.

However, the minister cautioned opponents of China that a blanket ban on imports from there cannot be imposed under the WTO framework. India and China are members of the World Trade Organisation and cannot opt for arbitrary measures.

Despite the growing bitterness between the two countries, imports from China shot up by 7pc in October, while exports from India dipped by 11pc. Several importers in India also try to hoodwink the customs authorities and buy stuff from China, but do not declare it.

Despite the growing clamour for a curb on Chinese imports, the Indian government says it has no plans to change its policies towards its neighbour

There are growing demands in India — mainly from the right-wing parties including the BJP’s ‘social’ organisations — for a clampdown on imports from China.

The government has also been succumbing to pressure and imports from China are expected to decline over the rest of the current fiscal. According to a survey by the research bureau of the PHD Chamber of Commerce and Industry, demand for Chinese products is declining in India.

Dr Mahesh Gupta, President, PHD Chamber of Commerce and Industry, says Indian production capabilities are increasing due to several factors including improvement in the ease of doing business. He says there is a significant shift in the consumption pattern in India as consumers shift from Chinese products.

India’s imports from China decelerated by 8pc during the first-half of this fiscal (April-September), though the trade deficit has crossed the $25bn-mark.

Bilateral trade between the two countries added up to more than $70bn in calendar year 2015, with imports from China alone accounting for almost $62bn. China accounts for nearly 45pc of India’s trade deficit.

Chinese imports into India have shot up since the Narendra Modi government came to power in 2014; imports have jumped from a mere $7bn to $52.69bn now.

India is also negotiating with the Regional Comprehensive Economic Partnership (RCEP) — which includes 10 Asean countries and six of its free trade partners including China and India — focusing on its export interests with all the countries.

Established about three years ago, the RCEP aims for regional economic integration and hopes to emerge as the largest regional trading block in the world, accounting for nearly 45pc of the world’s population and a combined GDP of more than $21tn.

India is keen that the partnership will result in the removal of technical barriers in trade in several sectors. It has, however, been cooperating with the body and in August agreed to relax its restrictions on its tariffs on imports from members of the body, including China, which is trying to gain greater market access to India.

Despite the growing clamour for a curb on Chinese imports, the government says it has no plans to change its policies towards its neighbour. The Chinese embassy in Delhi warned that any curbs that are imposed would negatively impact the investments into India from China, hurting Indian trade and consumers.

But China is apparently relaxing its rules. It recently agreed to import basmati rice from more than a dozen Indian companies. One of the largest importers of rice, China had not allowed imports of basmati from India, which is the world’s largest producer of this quality of rice.

RIGHTWING backers of the BJP have been opposing the growing Chinese trade presence in India. Last week, the Swadeshi Jagran Manch (SJM), the ultra-right outfit and economic unit of the Rashtriya Swayamsevak Sangh (RSS) — which is vehemently opposed to foreign investments including from the US and China — took on Paytm, the hugely successful mobile wallet provider in the country.

A spokesman of the SJM said the organisation will ‘study’ the close ties between Paytm and Chinese major Alibaba; the latter has a 40pc stake in Paytm after it injected $680m into India’s fastest-growing e-commerce major last year. There is speculation that Alibaba wants to raise this to 70pc.

“No Indian company should be sharing data with foreign companies and the investment routes should be made very transparent,” said a spokesman of SJM.

The recent demonetisation of Rs500 and Rs1,000 notes has boosted the fortunes of Paytm, which claims that more than 70pc of online mobile and DTH (direct-to-home television services) are being done through its platform.

The e-wallet firm saw a 435pc traffic jump during the first 24 hours after the Prime Minister Modi announced the demonetisation of Rs500 and Rs1,000 notes last month. Millions of consumers now prefer to pay their bills through online sites such as Paytm.

The company has more than 160m users in India and aims to raise this to 500m within a short time. Paytm has expectedly denied the charges levied on it by SJM.

Vijay Shekhar Sharma, founder and chief executive of Paytm, notes that his firm is ‘as Indian as Maruti’, the leading carmaker, which was once controlled by the government. Maruti, however, is now fully controlled by its Japanese promoter Suzuki.

Sharma says his firm is an Indian company and prides itself on being a representative of the ‘India story.’ The company has got a licence to set up the Paytm Bank, which will be launched in a few weeks.

Published in Dawn, Business & Finance weekly, December 5th, 2016