Problem Summary :-
Currently India is running on a trade deficit(Imports - Exports) of around 100 Billion dollars. Literally speaking, India as a whole is eating 100 Billion dollar more than what it is producing(If I am not rude). This amount of trade deficit is nominal for a country of this size but the China's component of India's trade deficit(around 150 billion dollar) seems to be worrisome. That means India is giving China every year an amount of 150 billion dollars. Adding fuel to the fire, this component is widening year on year. This deficit is mainly because of the CHEAP electronic items that techno-savvy Indians are importing from China. On the other hand, China is decreasing its reliance on the outside world being the country with highest amount of trade surplus. China is imposing restrictions on some Indian products like steel which is causing further woes to India. This kind of situation where India is heavy reliant on China is not at all healthy and should not persist for longer period.
Current Situation :-
India has been transforming from agricultural economy into a service based economy for the last few years. Dream of most of the fresh graduates is to land in a plush office where they are almost disconnected with the outside realistic world. Cocentration on key sectors like electronics, high speed technology which is demand of the future is out of sight. But China's dependence on India is very less in service economy, which is our strength. This is the main reason of the widening trade deficit between India and China.
In the process of more concentration on service sector, operational efficiencies of key sectors of India like supply chain management has taken a setback rather not improved and situation needs to be overhauled with utmost priority. Indian Supply chain management has become a separation between producer and consumer rather than facilitator. The news of 25% of the agriculture produce in India goes as a waste is not less than a surprise. Wastage can be attributed to the lack of quick transportation and cold storage facilities. Although political parties are boasting about so called development, there is room to develop alot in technical side. This is leading to lack of considerable exports in food products and thus unable to reduce gap.
Road ahead :-
Indian government has to seriously consider the China's dominance of India. India is insisting China to import certain Indian products to reduce trade gap although China is resisting pressure. India has to invest heavily in electronics and other fields of technology. Special Economic Zones(SEZs), tax holidays on electronic goods manufacturing companies, special incentives to Indian manufactures can serve the purpose to a certain extent and will help smoothen the things in long run. At the same time, India should concentrate on developing effective agricultural and storage facilities which will facilitate the reduction in trade gap of India with the outside world in the short run.
Currently India is running on a trade deficit(Imports - Exports) of around 100 Billion dollars. Literally speaking, India as a whole is eating 100 Billion dollar more than what it is producing(If I am not rude). This amount of trade deficit is nominal for a country of this size but the China's component of India's trade deficit(around 150 billion dollar) seems to be worrisome. That means India is giving China every year an amount of 150 billion dollars. Adding fuel to the fire, this component is widening year on year. This deficit is mainly because of the CHEAP electronic items that techno-savvy Indians are importing from China. On the other hand, China is decreasing its reliance on the outside world being the country with highest amount of trade surplus. China is imposing restrictions on some Indian products like steel which is causing further woes to India. This kind of situation where India is heavy reliant on China is not at all healthy and should not persist for longer period.
Current Situation :-
India has been transforming from agricultural economy into a service based economy for the last few years. Dream of most of the fresh graduates is to land in a plush office where they are almost disconnected with the outside realistic world. Cocentration on key sectors like electronics, high speed technology which is demand of the future is out of sight. But China's dependence on India is very less in service economy, which is our strength. This is the main reason of the widening trade deficit between India and China.
In the process of more concentration on service sector, operational efficiencies of key sectors of India like supply chain management has taken a setback rather not improved and situation needs to be overhauled with utmost priority. Indian Supply chain management has become a separation between producer and consumer rather than facilitator. The news of 25% of the agriculture produce in India goes as a waste is not less than a surprise. Wastage can be attributed to the lack of quick transportation and cold storage facilities. Although political parties are boasting about so called development, there is room to develop alot in technical side. This is leading to lack of considerable exports in food products and thus unable to reduce gap.
Road ahead :-
Indian government has to seriously consider the China's dominance of India. India is insisting China to import certain Indian products to reduce trade gap although China is resisting pressure. India has to invest heavily in electronics and other fields of technology. Special Economic Zones(SEZs), tax holidays on electronic goods manufacturing companies, special incentives to Indian manufactures can serve the purpose to a certain extent and will help smoothen the things in long run. At the same time, India should concentrate on developing effective agricultural and storage facilities which will facilitate the reduction in trade gap of India with the outside world in the short run.
