Figure this: Discrepancy in India-China trade data is only getting worse

What China sends doesn't match India's records on imports, and the mismatch is in billions of dollars

Trade with China before 1900 helped the early growth of some of India’s biggest conglomerates, including the Tata group and the Wadia family. More than 50 per cent of global trade in the 1800s involved India or China.

Recent data on trade between the two countries shows a curious discrepancy. China records billions of dollars more in goods leaving for India, than India records coming in. The gap has risen to $19 billion as of January, show Business Standard calculations based on government data from the two nations (chart 1).

Such discrepancies are noted elsewhere and several explanations have been suggested for the gap. Reasons include whether freight and insurance costs are included or if shipment values are accounted for by the last country through which they came or the country of origin. Trade fraud could be another explanation: It would involve showing a lower value of goods to reduce tariffs paid.

A 2023 Indian government study said that the country’s trade discrepancy with China is pronounced in five categories of goods. Business Standard looked at the latest available data for these categories. The difference in figures provided by the governments of China and India ranges from $369 million to more than $7 billion as of January numbers for FY24 (chart 2).

The largest variance is for electrical machinery, equipment and related goods. Each of the five categories has grown faster than India’s overall imports, meaning the trade discrepancies may not shrink anytime soon. Four categories recorded higher growth than overall imports from China. Iron and steel has grown at 26.6 per cent compared to a 2.6 per cent growth in Chinese imports. Overall imports to India from all countries are down 6.9 per cent, according to January numbers (chart 3).

The jury is out on the reasons that could explain the trade data discrepancy. The Indian government report said, "while underreporting may be cited as one of the plausible reasons coupled with unfair cross-border trade practices; a more granular examination may prove to be fruitful ...(and)...reduce loss to revenue exchequer".

International research shows that trade discrepancies increase with barriers. If that’s true, discrepancies may well widen amid talk of India increasing barriers to Chinese imports – and Beijing’s restrictions already in place.ORG: Akasa Air commences international operations