Non-tariff barriers are biggest hurdle in India-China trade, says Nirmala Sitharaman

India's Finance Minister Nirmala Sitharaman has voiced concerns over the widening trade deficit with China, attributing it to non-tariff barriers imposed by Beijing. Speaking at an IMF meeting in Bangkok, Sitharaman expressed that India's trade imbalance with China was rapidly expanding, stating, "With China, I think our trade balance is against us, and it is growing exponentially."

She emphasized that non-tariff barriers were the biggest hurdle in bilateral trade between the two nations. India's trade deficit with China has reportedly surpassed $100 billion this year, underscoring persistent concerns over bilateral trade relations. Sitharaman identified phytosanitary regulations as a significant barrier, citing that Indian products such as generic medicines, beef, and vegetables face restrictions in the Chinese market.

She noted that India had not reciprocated by imposing similar barriers or countervailing duties against Chinese goods. External Affairs Minister S Jaishankar had previously highlighted the lack of a level playing field for Indian businesses in China. The two countries' bilateral relations had already deteriorated following a deadly border confrontation in 2020, leading to restrictions on investments and business engagement.

However, New Delhi and Beijing have since resumed diplomatic engagement, with Prime Minister Narendra Modi and Chinese President Xi Jinping aiming to stabilize relations. Sitharaman also criticized India's existing trade arrangements with ASEAN, describing them as unfavorable, and announced that India intended to revise the agreement to address trade imbalances.

Additionally, Sitharaman highlighted India's dependence on imported crude oil and fertilizers, warning that rising expenditure on these commodities was increasing foreign exchange outflows. The Reserve Bank of India has reportedly intervened to manage foreign exchange requirements through dollar sales, special facilities for state-owned oil companies, and tighter currency derivatives regulations.

Despite the rupee recovering from near-record lows, underlying pressures remain. Sitharaman's remarks underscore India's efforts to improve market access while managing import dependence and currency volatility.