China’s Slowdown and India’s Opportunity · 2005-14 to 6.9% in 2015. The spillover effects of growth changes in the Chinese economy to emerging markets and rest of the world are

China’s Slowdown and India’s Opportunity Agrarian and Non-agrarian Perspective

Prepared by: Research Desk, TPCI

1

1. EXECUTIVE SUMMARY

With a GDP of $11.4 trillion, being the most populous country across the globe, China

contributes 13% to the global exports and 10% to the global imports. After 2010, the country

suffered a continuous decline plummeting down to single digit growth thereafter. We can witness

the major downturn by the decline in average growth rate which stood at an average of 9.9% for

2005-14 to 6.9% in 2015. The spillover effects of growth changes in the Chinese economy to

emerging markets and rest of the world are undoubtedly plausible. Thereby, the situation entails

opportunities for the Indian Economy. The paper focuses on how India can take advantage of the

ongoing situation in China and tap the markets where China exports. This would help increase

our exports as well as fulfill the demands of the importing nations.

The paper begins with the brief of the Chinese Economy and its contribution to the global trade.

The next section throws light on the major exported and imported products of China and their

shares in the export and import basket respectively. Also, the growth rates of exports and imports

over several spans are calculated to capture the major trends and changes. Over the past two

years, the growth rates, especially that of exports exhibit decline, turning even negative. The

shares of the commodities in the import and export basket show a mixed trend. For some

commodities, the negative shares depict the decrease in dependence on imports and decline in

exports that can be attributed to the slowdown. Besides, the trade openness index for the

agricultural commodities is calculated. The small value of the index depicts the self-reliance of

the economy and low dependency on trade for the agricultural commodities.

Next, Commodities which are vital to global trade and are vital for China domestically are

identified. These include the commodities at two digits level HS Code –

02,03,07,08,09,10,14,15,17 to 22 for the agricultural commodities. For non-agricultural

commodities, they consist of HS Codes – 71 to 95, HS Codes- 29,30,40 and 48.Then the top five

nations which export to China and which import from China for these commodities are identified

along with the value of imports and exports in USD thousands for the year 2015.

The section on India’s opportunity covers 4 digits analysis to be sure of India’s capability

without any ambiguity. The RCAs of the commodities presented in section 4 is calculated at 4

2

digits level. Next, the commodities for which India’s RCA is greater than 1 are identified. For

these commodities, China’s RCA is also calculated. Finally, the commodities where we have

RCA greater than that of China are selected with the purpose of increasing our exports to those

nations where China currently supplies. Also, an analysis of the tariff lines imposed by the

importing nations is done to support the arguments presented. It is found that in case of

agricultural commodities, Republic of Korea, Thailand, US and Germany provide favorable tariff

to India, as compared to China. On the other hand, for most non- agricultural commodities, India

faced similar or favorable tariffs than China.

News insights cover the current scenario of the Chinese economy and China’s stance amid the

slowdown. For instance, the main priorities of China’s new 13th Five Year Plan include greater

focus on innovation and industrial upgrading, along with a shift in growth model from an export

led economy based on manufacturing to service based economy with more emphasis on domestic

consumption.

Also, it covers the recent measures implemented by the Chinese Govt. in context of trade regime.

For example, China has lifted the import ban on bovine and ovine genetic material from EU

countries, Denmark, France, Germany, and United Kingdom. Moreover, China and Australia

trade relations enhance with the China-Australia Free Trade Agreement in place. The agreement

removes barriers to trade in goods, services and investment; more than 86 percent of Australia’s

goods exports to China will enter into duty free area. And the percentage will rise to 93 percent

after four years and 96 percent once the full agreement is implemented.

China’s growth deceleration may continue, it is hoped that it will be gradual. There has been

focus on innovation and industrial up gradation to boost productivity, to offset the impact of

declining working age population (among the priorities of China’s five year plan 2016-20).

There has been a shift from reliance on the manufacturing sector to the services and domestic

consumption. As china gradually shifts from the low cost labor-intensive manufacturing

industries and as the demand for quality consumer goods by the middle class increases, it will

beneficial for both the growth of the Chinese economy and for the world as new opportunities

will be available to the other economies.

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2. METHODOLOGY

1.Initially, top ten import and export commodities (at HS-2 digit) are identified.The exponential growth rates of the selected commodities are calculated for these phases: 2005-09, 2010-14 and 2014-15. For exports, the growth rates are positive for 2005-09 and 2010-14, but turned negative for 2014-15. For imports, the rates are positive for 2005-09 , but turn negative for some commodities in 2010-14. In 2014-15, the growth rates declined and turned negative for all except one . The percentage share of all the commodities in the export and import basket is compared for the years 2005 and 2015. For exports, the share increased for six products, for imports it has a mixed trend.

2. China remains a protected economy, as can be evidenced from the lower Trade Openness Index for the agricultural goods,with value hovering around 1.5 during 2004-14. In addition this protection is more rigid for India, as can be seen from the high tariffs for the agricultural goods imposed on India, in comparison to other nations.

3. Major (Top Five, in value terms) export and import destinantions for 12 agricultural and 28non- agricultural products were found out.

4. For these commodities, RCA is calculated at HS-4 digit level. Out of 109 agricultural commodities, 33 have RCA greater than 1. Out of these, 20 have RCA greater than 2 , and 13 have RCA greater than 4. For non-agricultural commodities, out of 340, only 132 have RCA greater than 1. Further, commodities which have RCA greater than 1, RCA comparison is done for India and China. There are, 32 agricultural and 102 non-agricultural commodities, where India's RCA is greater than that of China. Thus, there are 134 commodities at HS -4 digit level, where India fares better than China.

5. Export destinations from the previous analysis (Point 3) for these 134 commodities , can be tapped by India. For further analysis, tariff lines at HS- 4 digit level applied by the importing nations on China and India are compared. In case of agricultural commodities, Republic of Korea, Thailand, US and Germany provide favourable tariff to India, as compared to China. On the other hand, for most non- agricultural commodities, India faces similar or favourable tariffs than China.

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Contents

1. EXECUTIVE SUMMARY..................................................................................................................... 1

2. METHODOLOGY ................................................................................................................................. 3

3. BRIEF OF THE CHINESE ECONOMY ............................................................................................. 5

4. EXPORTS AND IMPORTS OF CHINA .............................................................................................. 8

4.1. China’s export basket ...................................................................................................................... 8

4.3. Trade Openness Index for agricultural commodities ................................................................. 12

5. MAJOR EXPORT DESTINATIONS AND SUPPLIERS TO CHINA............................................ 15

5.1. Agricultural commodities .............................................................................................................. 15

6. INDIA’s OPPORTUNITY ................................................................................................................... 42

6.1. Comparison of China and India’s RCA for the potential goods................................................ 42

6.2. Tariff faced by India and China for same product by the importing nations .......................... 61

7. NEWS INSIGHTS ................................................................................................................................ 69

7.1. Current Scenario ............................................................................................................................ 69

7.2. China’s stance amid the slowdown ............................................................................................... 70

7.3. Chinese trade regime ..................................................................................................................... 71

8. CONCLUSION ..................................................................................................................................... 74

ANNEXURE-I ........................................................................................................................................... 75

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3. BRIEF OF THE CHINESE ECONOMY

The deceleration of growth in China confirms a multi-year slowdown. The growth rate of 6.9%

in 2015 is the lowest reading for the nation since global financial crisis. With a GDP of $11.4

trillion, being the most populous country across the globe, the country contributes 13% to the

global exports and 10% to the global imports. China is also an export destination for most of the

developed and emerging economies. Also, exports to China account for 2.3% of the GDP of the

developed economies. In the case of emerging markets, the merchandise exports contribute 2.3%

to the GDP of these economies.

China began its export-led growth in mid 1980s when it started opening up its economy, inspired

by the success of its East Asian neighbors. After joining WTO in 2001, China was fully able to

integrate into the world economy. After 2001, the Chinese exports grew by 27.3% while the

imports grew by 24.8%. China was able to maintain a current account surplus after 2004. With

the increasing trade volumes, China’s trade dependency also increased, total trade volume as a

share of GDP was 65% and exports as share of GDP became 35%. The GDP grew an average of

10% per annum from 2000-2010. The extraordinarily high trade volumes could be attributed to

the undervalued Yuan and the double transition, which refers to two profound transformations

that happened in China. One is the fast pace of industrialization along with the rural-urban

migration. Other is the demographic transition after the one-child policy introduced in 1979.

Unlike 1980s where the industrialization was carried by indigenous township and village

Enterprises, industrialization in later years was export led. The coastal areas that contributed

90% to the total exports had ubiquitous advantage over the inland. Thus the coastal areas

attracted people from inland and led to increase in migration over the years with the labor force

crossing 400millions in the coastal lands. Also, the one child policy which led to the slowdown

of the population growth resulted in the high levels of working age ratio. This double transition

gave China comparative advantage in labor resources and accession to WTO allowed it to play

this advantage fully. China has cheapest labor force among the East-Asian economies which is

well trained too. Thus East Asia manufacturing boosted with China as its centre. The

surrounding countries became suppliers of materials and intermediate goods. Thus, China

became a favorable destination for exports from the surrounding countries and imported cheap

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intermediate goods from them. China witnessed high rates of growth since 2005. The highest growth

rate achieved is 14.2% in 2007.

China’s growth rate after achieving double digit growth till 2007, slowed to single digit in 2008

and 2009, then reviving back only in 2010 at 10.6%. After 2010, it suffered a continuous decline

plummeting down to single digits thereafter. We can witness the major downturn by the decline

in average growth rate which stood at an average of 9.9% for 2005-14 to 6.9% in 2015. The

projected growth rates are 6.3% for 2016 and 6% for 2017 by IMF World Economic Outlook.

China’s economy has slowed down now, and is also set to be sustained. The major reasons for

slowing down of the economy are:

Being a major exporter, slowdown among the major trading partners of China, mainly,

EU, Japan and South Korea has had a knock-on effect on demand from China.

Another growth inducing sector is the Real Estate Sector, and plummeting in these

sectors also has an adverse impact on derived industries demand such as steel, cement,

glass, furniture, and appliances.

The manufacturing industry has automobiles and construction sector as its major income

generator, accompanying this is the fact that China is the largest producer of steel in the

world. Hence, if steel prices go down due to over production or lack of demand, then

Chinese economy would be directly affected.

Although, the debt saved the Chinese economy through the global financial crisis, but it

also left the economy with a heavy repayment burden flowing largely to property

developers, and with these inventories remaining unsold, this debt can take years to get

cleared off.

The projected growth rate for 2017 is 6% reflected by the repressed household consumption and

diversion of household savings to Investment for the economy. As a result, debt of the Chinese

economy jumped from 148% of GDP in 2007 to 249% of GDP at the end of Dec’15. On the

disaggregation of the debt, it was seen that Government’s debt was 43.9% of GDP that of

households was 38.8% of GDP. Whereas the corporate debt was the largest, this was 166.3% of

the GDP. As compared to other nations, the coverage by the Government was very minimal,

both the Government and household didn’t contribute much to the total debt.

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Coming to other indicators, China ranked 84 on the ease of doing business (World Bank Report)

in 2014 which is less than the lowest previous value achieved which was 86 in 2008. The highest

value reported by China was 99 in 2012. On the competitiveness index, China was ranked the

28th most competitive nation out of the 144 nations as per the Global Competitiveness Report

(World Economic Forum, 2015-16). The index was all time high at 34 in 2008.

China acts as major source of cheap labor, cheap goods, and cheap capital to the rest of the

world. Thus, spillover effects of growth changes in the Chinese economy to emerging markets

and rest of the world are undoubtedly plausible.

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4. EXPORTS AND IMPORTS OF CHINA

This section throws light on the major exported and imported products of China and their shares

in the export and import basket respectively. Also, the growth rates of exports and imports over

several spans are calculated to capture the major trends and changes.

4.1. China’s export basket

On analyzing the exports of the nation in value terms (in USD thousand), it is found that the

export basket of China majorly constitutes the following commodities at 2 digits HS Code:

1. 29 – Organic chemicals.

2. 39 – Plastics and articles thereof.

3. 61 – Articles of apparel, accessories, knit or crochet

4. 62 – Articles of apparel, accessories, not knit or crochet

5. 64 – Footwear, gaiters and the like, parts thereof

6. 71 – Pearls, precious stones, metal coins etc.

7. 72 – Iron and Steel

8. 73 – Articles of iron and steel

9. 84 – Machinery, nuclear reactors, boilers etc.

10. 85 – Electrical, electronic equipment

11. 87 – Vehicles other than railway tramway

12. 89 – Ships, boats and other floating structures

13. 90 – Optical, photo, technical, medical etc. apparatus

14. 94 – Furniture, lighting, signs, prefabricated buildings

15. 95 – Toys, games, sports requisites

The trends of the top 10 exported commodities for the years 2005-15 is analyzed –

HS

CODE

2005-09

GROWTH

2010-14

GROWTH

2014-15

GROWTH

% SHARE IN

2005

% SHARE IN

2015

29 22.27 8.41 -6.07 1.59 1.87

39 10.48 17.55 -1.43 2.33 2.89

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HS

CODE

2005-09

GROWTH

2010-14

GROWTH

2014-15

GROWTH

% SHARE IN

2005

% SHARE IN

2015

61 15.19 8.67 -8.86 4.05 3.67

62 7.88 9.28 -3.61 4.60 3.44

64 11.41 11.73 -4.69 2.50 2.35

71 8.52 46.77 -53.82 0.73 1.28

72 5.44 13.54 -11.28 1.98 2.16

73 19.00 10.39 -0.02 2.50 2.66

84 13.60 6.13 -9.06 19.65 15.98

85 16.47 10.51 5.14 22.61 26.31

87 17.40 12.69 -2.41 2.18 2.75

89 56.70 -12.70 14.25 0.61 1.26

90 11.98 9.49 -0.30 3.34 3.23

94 16.60 17.37 5.74 2.93 4.33

95 10.77 6.10 10.86 2.51 1.87

The exponential growth rate for the top exported commodities is calculated over three spans,

2005-09, 2010-14 and 2014-15.

Broadly, the growth rates fell for some commodities and increased for some in the second

phase as compared to that in first phase. Only for the commodity 89, the growth rate

became negative.

On a comparison between the second and third phases, the growth rates of all the

commodities fell not only drastically but turned negative also except for the commodities

with HS Code 85, 89, 94 and 95 where the growth rates still remained positive.

This plummeting growth rates show untapped opportunities for other nations to grab the

market share of Chinese export destinations and increase their exports as a result.

Also, the share of these commodities in the total exports is calculated for 2005 and 2015. The

analysis is made on the changes in the trend of the shares.

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The percentage share in the total exports declined for the commodities with HS Code 61,

62, 64, 84, 90 and 95.

For the remaining commodities, the shares increased marginally only except the

commodity 94.

Thus, on coverage of a ten year span we see in 2015 that the shares didn’t shoot up by

very large amount showing the weakening capabilities of the Chinese.

4.2. China’s import basket

Although, China is stands to be a major exporter, but since neither country is self sufficient, it

imports also. Its major importing commodities for the year 2005-2015 at 2 digits HS Code are:

1. 12 – Oil seeds, olegic fruits, grain, seed, fruit, etc, nes

2. 26 – Ores, slag and ash

3. 27 – Mineral fuels, oils, distillation products, etc

4. 29 – Organic Chemicals

5. 39 – Plastics and articles thereof

6. 72 – Iron and steel

7. 74 – Copper and articles thereof

8. 84 – Machinery, nuclear reactors, boilers etc.

9. 85 – Electrical, electronic equipment

10. 87 – Vehicles other than railway, tramway

11. 90 – Optical, photo, technical, medical, etc apparatus

12. 99 – Commodities not elsewhere specified

To evaluate the impact of slowing down, we evaluate the exponential growth rates of the

country’s import basket over the three phases, that is, 2005-09, 2009-14 and 2014-15.

HS

CODE

2005-09

(GROWTH)

2010-14

(GROWTH)

2014-15

(GROWTH)

%GE SHARE

IN 2005

%GE SHARE

IN 2015

12 34.19 14.37 -13.24 1.24 2.37

26 34.30 4.14 -29.51 3.94 5.65

27 21.67 12.38 -37.29 9.71 11.81

11

HS

CODE

2005-09

(GROWTH)

2010-14

(GROWTH)

2014-15

(GROWTH)

%GE SHARE

IN 2005

%GE SHARE

IN 2015

29 8.15 5.01 -20.62 4.25 2.85

39 10.60 3.69 -12.74 5.05 3.90

72 3.27 -6.24 -13.90 3.97 1.08

74 23.02 -0.37 -18.85 1.95 2.28

84 7.70 -0.73 -12.38 14.59 9.35

85 8.99 8.60 1.71 26.49 25.67

87 23.71 13.99 -22.23 1.87 4.14

90 9.03 4.15 -5.74 7.57 5.93

99 19.43 45.54 -2.71 0.30 4.79

As a major surprise, the ranking of top five commodities imported over the period in terms of

value of imports remains the same, that is, 85- Electrical, electronic equipment, 27- Mineral

fuels, oils, distillation products, etc,84- Machinery, nuclear reactors, boilers etc.,26- Ores, slag

and ash and 90- Optical, photo, technical, medical, etc apparatus.

Exponential growth rates

The exponential growth rates over the period 2005-09, have been the largest for , mainly,

oil seeds, olegic fruits, grain, seeds, fruit, etc, nes.(HS CODE-12) and ores, slag and ash

(HS CODE-26).

For the period 2010-14, the exponential growth rate has been highest for commodities not

elsewhere specified (HS CODE-99). However, the growth rate of imports fell into the

negative limits for iron and steel (HS CODE-72), copper and articles (HS CODE-74) and

machinery, nuclear reactors, boilers, etc (HS CODE-84).

The slowing down of economy had a direct impact on the import basket , as is evidently

shown by the negative growth rate of imports in value terms for all commodities, except,

for Electrical, electronic equipment (HS CODE-85)during 2014-15. The above

phenomenon is clearly explained by the slowing down of the economy on whole, which

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has lowered the purchasing power of the Chinese consumers and hence lead to a decline

in imports.

On comparing exponential growth in imports between the phases 2004-09 and 2010-14, it

is evident that declining demographic dividend had hit the economy , hence leading to a

significant fall in growth rate of imports of all commodities, except for electrical and

electronic equipments which has remained stagnant, and increased with a huge bound for

commodities not elsewhere specified (HS CODE-99).

And, the major impact of Chinese Crisis can be seen on observing exponential growth

rates for the imports over the period 2010-14 and 2014-15, which have fallen from

positive territories to negative territories, for all products, except for electrical and

electronic equipments.

Percentage share in total imports

In 2005, the majority share in total imports was occupied by electrical and electronic

equipment’s and vehicles other than railways, tramways.

In 2015, this majority was enjoyed by electrical and electronic equipments and mineral

fuels, oils and distillation products, etc.

Over 2005 and 2015, the percentage share in total imports has increased for commodities

with HS CODES- 12, 26, 27, 74, 87 and 99 and has decreased for HS CODES-29, 39, 72,

84, 85 and 90.

4.3. Trade Openness Index for agricultural commodities

In order to evaluate China’s stake on imports of agricultural products into its territory, Trade

Openness Index for agricultural products is calculated, and the result indicates an abysmally low

Trade Openness Index for Chinese agricultural import, where Trade Openness Index gives an

idea of the size of the country’s traded sectors in relation to total output. The formula for

calculation of the index is: (Imports + Exports) as a percentage of GDP. According to Pritchett

(1996), “openness” can be equated for economy’s trade intensity.

YEAR TRADE OPENNESS INDEX (Agricultural)

2004 1.935078998

2005 1.875086107

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YEAR TRADE OPENNESS INDEX (Agricultural)

2006 1.702403278

2007 1.640491692

2008 1.626464697

2009 1.431794002

2010 1.561350813

2011 1.567234616

2012 1.573469514

2013 1.54892441

2014 1.533476289

As discussed above, this may be due to unfavorable size and, or geography of China, or due to

government restrictions limiting Chinese imports of agricultural products. Being, the world’s

third largest country and located along the coastline of the Pacific Ocean, the first possibility gets

eliminated. Thus, Chinese Communist Government has restricted the imports of agricultural

products. This could be further validated from the table below, which shows the higher amount

of tariff applicable on Chinese agricultural imports from India.

HS -2 PRODUCT LABEL TARIFF APPLIED BY

CHINA (ESTIMATED,IN

PERCENTAGE)

01 LIVE ANIMALS NO IMPORTS

02 MEAT AND EDIBLE MEAT OFFAL 16

03 FISH, CRUSTACEANS, MOLLUSCS, AQUATIC

INVERTEBRATES NES

8.5

04 DAIRY PRODUCTS, EGGS, HONEY, EDIBLE

ANIMAL PRODUCTS NES

11.7

05 PRODUCTS OF ANIMAL ORIGIN, NES 7.7

06 LIVE TREES, PLANTS, BULBS, ROOTS, CUT

FLOWERS ETC.

5.5

07 EDIBLE VEGETABLES AND CERTAIN ROOTS

AND TUBERS

9.7

08 EDIBLE FRUITS, NUTS, PEEL OF CIRCUIT

FRUIT, MELONS

12.4

09 COFFEE, TEA, MATE AND SPICES 9.8

10 CEREALS 51.4

11 MILLING PRODUCTS, MALT, STARCHES,

INSULIN, WHEAT GLUTTEN

25.9

12 OILSEEDS, OLEGAIC FRUITS, GRAIN, SEED,

FRUIT, ETC, NES

1.2

13 LAC, GUMS, RESINS, VEGETABLE SAPS AND 12.9

14

HS -2 PRODUCT LABEL TARIFF APPLIED BY

CHINA (ESTIMATED,IN

PERCENTAGE)

EXTRACTS NES

14 VEGETABLE PLAITING MATERIALS,

VEGETABLE PRODUCTS, NES

8

15 ANIMALS, VEGETABLE FATS AND OILS,

CLEVAGE PRODUCTS ETC.

10.2

16 MEAT, FISH AND SEAFOOD FOOD

PREPARATIONS

11.1

17 SUGARS AND SUGAR CONFECTIONARY 33.4

18 COCOA AND COCOA PREPARATIONS 8.2

19 CEREAL, FLOUR, STARCH, MILK

PREPARATIONS AND PRODUCTS

15.7

20 VEGETABLE, FRUITS, NUTS, ETC. FOOD

PREPARATION

17.8

21 MISCELLANEOUS AND EDIBLE

PREPARATIONS

17.1

22 BEVERAGES, SPIRITS AND VINEGAR 14.5

23 RESIDUES, WASTES OF FOOD INDUSTRY,

ANIMAL FODDER

4.1

24 TOBACCO AND MANUFACTURED TOBACCO

SUBSTITUTES

23.2

In most of the above mentioned agricultural goods, minimal or no tariff is applicable to other

economies. For example, the rate applicable to India on Cereals is 51.4%, whereas, for Malaysia

and Singapore it is 24.8 %. Similarly, for India the tariff on meat and edible meat offal is 16%,

whereas there are no tariffs for imports from Chile and Thailand for the same product. Hence,

from trade negotiations and developing diplomatic ties with the nation, a huge amount of

revenue can flow into India’s agricultural sector by extending India’s role in the Chinese

Agricultural market. And, it could then boost the agricultural economy of India, when much

needed impetus is required in the sector.

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5. MAJOR EXPORT DESTINATIONS AND

SUPPLIERS TO CHINA

Commodities which are vital to global trade and are vital for China domestically are identified.

Next, the top five nations which export to China and which import from China for these

commodities are identified along with the value of imports and exports in USD thousand for the

year 2015.

5.1. Agricultural commodities

There exists a strong fact that trade intensity is lower for agricultural products as compared to the

manufacturing products. And the main reasons are cited apart from the basic reason of

agricultural goods being perishable commodities are:

The heterogeneity of agricultural products is relatively large as compared to the

manufacturing products.

Due to the urgency required for agricultural commodities to reach the destination

countries in due time, huge costs are incurred not only in their transportation, but also,

packaging and branding.

Agricultural commodities can be indicated by HS CODES from 00 to 24, thus our examination is

restricted for only these commodities. The report tries to find out agricultural markets, where

there exist large unrealized gains for India.

After analyzing and eliminating certain commodities, we reach to the conclusion that India can

tap 12 markets out of these 24 at the initial stage. And, elimination of the rest of the products

exist on the reason that for agricultural products the gestation period is very low as goods are

perishable, thus Indian farmers have lower bargaining power. Apart from these for some

products ethical and social barriers to trade exist, such as Live Animals(HS CODE-01) are not

exported by India; other being, some restrictions on sanitary and phyto-sanitary measures such as

for the product Meat, Fish and Seafood Food Preparations(HS CODE-16).The resultant goods

are:

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MEAT AND EDIBLE MEAT OFFAL (HS CODE-02)

FISH, CRUSTACEANS, MOLLUSCS, AQUATIC INVERTEBRATES NES ( HS

CODE-03)

EDIBLE VEGETABLES AND CERTAIN ROOTS AND TUBERS (HS CODE-07)

EDIBLE FRUITS, NUTS, PEEL OF CIRCUIT FRUIT, MELONS (HS CODE-08)

COFFEE, TEA, MATE AND SPICES ( HS CODE-09)

CEREALS ( HS CODE-10)

VEGETABLE PLASTING MATERIALS, VEGETABLE PRODUCTS NES (HS

CODE-14)

ANIMAL, VEGETABLE FATS AND OILS , CLEVAGE PRODUCTS ETC. (HS

CODE- 15)

SUGARS AND SUGAR CONFECTIOANRY (HS CODE-17)

COCOA AND COCOA PREPARATIONS (HS CODE-18)

CEREAL FLOUR, STARCH, MILK PREPARATIONS AND PRODUCTS ( HS CODE-

19)

VEGEATBLE, FRUIT, NUT,ETC. FOOD PREPARATIONS ( HS CODE-20)

MISCELLANEOUS AND EDIBLE PREPARATIONS ( HS CODE-21)

BEVERAGES, SPIRITS AND VINEGAR ( HS CODE- 22)

Top export and import destinations of China for the selected products:

GOOD 1

HS Code – 02

Product Label – Meat and edible meat offal

Export destinations

for China

Value of

exports(2015) Suppliers to China

Value of

imports(2015)

Hong Kong, China 721302 Australia 1024671

Kyrgyzstan 86230 Brazil 992221

Malaysia 65653 New Zealand 883175

Macao, China 44049 Germany 606302

Russian Federation 20225 Uruguay 539875

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For the given product, China re-exports it to Macao and Hong Kong, as is evident from

the above table. Also, the country is a net importer for this category with a trade balance

in 2015 as 5,740,670 USD’000.

The major export commodities under this basket at HS- 6 digit level are frozen or

processed swine cuts; fresh, frozen and chilled fowls( Gallus Domesticus ) ; Bovine cuts

boneless (frozen) .

India is the major exporter of Bovine cuts boneless (frozen) having a whooping exported

value in 2015 as 4,030,281 USD’000 and frozen Fowls (Gallus Domesticus) to serves as

India’s sixth largest product in this category in terms of value.

GOOD 2

HS Code – 03

Product Label – Fish, Crustaceans, Molluscs, Aquatic invertebrates nes

Export destinations

for China

Value of exports

(2015) Suppliers to China

Value of imports

(2015)

Japan 1874954 Russian Federation 1171795

United States of

America 1826246

United States of

America 1084758

Hong Kong, China 1456357 Canada 547494

Korea, Republic of 1305653 New Zealand 356922

Thailand 991597 Norway 339621

According to FAO, China is the largest producer of capture fisheries as well as accounts

for 70% of the world’s production of aquaculture. This is also enhanced by the fact that

China is a net exporter of the product with a massive amount of trade balance in 2015 as

6,989, 076 USD’000.

In Aquaculture, India could develop with the help of government’s attention towards the

sector as it’s a peninsular state and has large untapped potential in its marine economy. In

capture fisheries; India is not that behind with respect to China, as it is also the seventh-

largest producer of capture fisheries.

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GOOD 3

HS Code – 07

Product Label – Edible Vegetables and certain roots and tubers

Export destinations

for China

Value of exports


Value of imports

(2015)

Viet Nam 1478706 Thailand 1706224

Japan 1249390 Viet Nam 386068

Hong Kong, China 1009494 Canada 299685

Malaysia 696066 India 573455

Korea, Republic of 572398

United States of

America 50807

China shares a good trade balance in this sector as well of 6,404,978 USD’000. India,

being an agrarian economy has a wider set of products to be exported.

Although, at present India’s value of exported goods in this sector is less than that of

China, it is not much far.

For example, for Onions, the exported value of China in 2015 is 476,712 USD’000 and

for India is 428, 378 USD’000. And, other such major products are processed vegetables

(Fresh or chilled vegetables n.e.s; HS CODE-070999), onions and potatoes.

GOOD 4

HS Code – 08

Product Label – Edible Fruit, Nuts, Peel of circuit fruit, melons.

Export destinations

for China

Value of exports


Value of imports

(2015)

Thailand 1114640 Thailand 1168638

Viet Nam 870519 Chile 983237

Hong Kong, China 398876 Viet Nam 924389

Malaysia 366968 Philippines 575230

Russian Federation 342518

United States of

America 525125

19

China is a net importer for the commodity and a considerable amount is re-exported to

Hong Kong. Although, India is also a net importer for the good.

But, the major exported commodities for the two countries are entirely different, with

China being the major exporter of Apples, Grapes and Pears. And, India being the major

exporter of Cashew nuts, Guavas, Coconuts.

Hence, with the development of Horticulture, India can tap the world market for the

category.

GOOD 5

HS Code – 09

Product Label – Coffee, Tea, Mate and Spices

Export destinations

for China

Value of exports


Value of imports

(2015)

Morocco 228392 Viet Nam 84676

United States of

America 221089

Indonesia 58086

Japan 160906 Malaysia 45024

Hong Kong, China 159728 Sri Lanka 38999

Germany 138036 Taipei, Chinese 26716

Within this sector, India’s market is predominated by the export of Black Tea with India

having exported value in 2015 as 600, 128 USD’000 and China with 181,579 USD’000.

Another prominent sector is that of spices with India having an export value of 135,328

USD’000 and China with the value of 24,438 USD’000.

This can also be supported by the qualitative argument, as Indian spices are the most

sought after globally, given their exquisite aroma, texture, taste and medicinal value.

Among 109 varieties listed by the International Organization for Standardization (ISO),

the country produces about 75 of the varieties, thus amounting to more than half of the

global market of spices.

20

GOOD 6

HS Code – 10

Product Label – Cereals

Export destinations

for China

Value of exports


Value of imports

(2015)

Korea, Republic of 139896

United States of

America 2777812

Japan 54550 Australia 2132375

Viet Nam 21316 France 1097876

Pakistan 19561 Ukraine 1061352

Hong Kong, China 18421 Viet Nam 732330

China is a net importer for the product having an overall trade balance of 9,027,574

USD’000. And, India on the other hand is the producer and exporter in the world.

Within this, although rice (including Basmati and Non Basmati) occupies the major

share, thus there is a need for escalation of exports of other cereals.

Currently, India does not have any of the export markets of China as its export market.

Hence, there exists an untapped responsibility.

GOOD 7

HS Code – 15

Product Label – Animals, Vegetable Fats and oils, Clevage products etc.

Export destinations

for China

Value of exports


Value of imports

(2015)

Korea, Democratic

People's Republic of 104627 Indonesia 3065534

United States of

America 86482 Malaysia 1780658

Hong Kong, China 64046 Ukraine 638280

Chile 54324 Argentina 501362

Canada 41189 Canada 439376

21

China, being a net importer for the category does not have a huge potential in the sector.

Also, its re-exports to Hong Kong is evident from the above table.

India can increase its production as well as exports in Fish fats & oils their fractions,

which is also China’s major product for exports in this sector (HS CODE- 150420).

Another, untapped market is that of Vegetable Fats & oils Nes & their fractions refined or

not, but not chemically modified (HS CODE-151590).

GOOD 8

HS Code – 17

Product Label – Sugars and Sugar confectionary

China is the net importer for the commodity with trade balance for year 2015 at 517,583

USD’000. India is considered as the world’s second largest producer after Brazil.

For the 2016-17 seasons the total sugar availability is estimated to be over 31 million

tones, whereas domestic demand to be 26 million tones.

This lower production is due to lower cane plantation in the drought affected states of

Maharashtra and Karnataka, however despite such scanty rainfall, India still has 5 million

tons for export. Thus, with irrigation facilities India could increase its production as well

as exports.

GOOD 9

HS Code – 18

Product Label – Cocoa and Cocoa Preparation

Export destinations for

China

Value of exports


Value of imports

(2015)

Philippines 293175 Brazil 944814

United States of

America 162855

Thailand 251095

Indonesia 130209 Cuba 213998

Malaysia 78534 Australia 132144

Australia 66756 Guatemala 118667

22

China has a negative trade balance of 429,824 USD’000. India’s major exported

commodities, where, India has a lagging but good market share compared to china are

Chocolate and other food preparations containing cocoa nes ( HS CODE-180690) and

Cocoa butter, fat and oil( HS CODE-180400) .

Whereas, other products where India needs to push much harder are Chocolate and food

preparation containing Cocoa in blocks, slabs/ bars, not filled within 2kg (HS CODE-

180632) and Chocolate and food preparations containing Cocoa in blocks, slabs/bars,

filled within 2kg (HS CODE-180631).

GOOD 10

HS Code – 19

Product Label – Cereal, Flour, Starch, Milk Preparations and Products.

Export destinations of

China

Value of exports


Value of imports

(2015)

Hong Kong, China 355408 Netherlands 846497

Japan 238915 Ireland 429192

United States of

America 170522 Germany 326515

Korea, Republic of 128796 Singapore 268660

Australia 67763 New Zealand 256513

China has a trade balance in the negative territory worth 2,314,229 USD’000. Whereas,

India has a positive trade balance of 432,394 USD’000.

India, has the exported value in 2015 for Communion wafers, empty cachets f pharm use

& sim production & bakers’ wares nes approximately half of that of China (HS CODE-


China

Value of exports


Value of imports

(2015)

Hong Kong, China 102150 Italy 176242

Germany 63028 Malaysia 107171

Korea, Republic of 34780 Indonesia 82117

Philippines 29958 Ghana 52930

United States of


23

190590), whereas, that of Sweet Biscuits can be spread widely to other nations (HS

CODE-190531).

GOOD 11

HS Code – 20

Product Label – Vegetable, Fruit, Nuts etc Food Preparations


China

Value of exports


Value of imports

(2015)

Japan 1680881 United States of

America 239290

United States of

America 1103790 Brazil 92790

Korea, Republic of 613640 Korea, Republic of 91222

Russian Federation 315658 Thailand 66915

Germany 224976 Philippines 39189

China has a well-established market for the product, which is well depicted by the

positive trade balance of 6,515,267 USD’000.

Apart from USA, India has untapped these top five export markets of China. But, to the

contrary, India does not have a higher trade balance in this sector, so the sector could be

put on second priority list.

GOOD 12

HS Code – 21

Product label – Miscellaneous edible Preparations


China

Value of exports


Value of imports

(2015)

Hong Kong, China 407080 United States of America 346743

United States of

America 329883 Australia 132537

Japan 223766 Malaysia 125249

Korea, Republic of 174905 Taipei, Chinese 119156

Philippines 141680 Thailand 103899

24

China has a whopping trade balance for the category of 1,193,350 USD’000. Although,

India has a lower trade balance in this sector, it needs to thus first focus on production

increase before targeting the export markets.

Hence, the sector can serve as the secondary market or to be on the second priority list.

5.2. Non-agricultural commodities

GOOD 1

HS Code – 71

Product Label – Pearls precious stones, metals, coins etc.


China

Value of exports


Value of imports

(2015)

Hong Kong, China 20575035 South Africa 6201328

United States of America 4209520 Myanmar 2267301

Belgium 486804 India 1962751

Singapore 316409 Thailand 1325403

Myanmar 304000 Hong Kong, China 1197962

China exports 1,79,57,139 USD thousands and imports 2,91,86,637USD thousands of the

commodity. Hence, China is a net importer of the good.

The good is majorly exported to Hong Kong, China. The share it holds in total exports of

the good is 70.49%.

Although a miniscule amount, India supplies the good to China as India is also one of the

major exporters of the good in global market.

GOOD 2

HS Code – 72

Product Label – Iron and Steel


China

Value of exports


Value of imports

(2015)

Korea, Republic of 6333755 Japan 5970307

25

Viet Nam 4152264 Korea, Republic of 3391356

India 2260925 South Africa 1730037

Philippines 2173191 Taipei, Chinese 1387836

Thailand 2012015 Germany 765066

China exports 4,92,23,944 USD thousands and imports 1,82,25,686 USD thousands of

the good. The figures imply that China is a net exporter of the good.

From the glimpse of the table, we see that India imports the good from China.

However, analysis at the four digit level of the HS Codes, we would find that both India

and China are competitive in various categories of the good.

GOOD 3

HS Code – 73

Product Label – Articles of iron or steel

Export destinations

for China

Value of exports


Value of imports

(2015)

United States of

America 10539320 Japan 1940587

Japan 3175544 Germany 1750641


Australia 1813076 United States of

America 1189802


China exports 6,06,29,517 USD thousand and imports 1,01,12,329 USD thousand of the

good implying that China is net exporter of the good.

The exports are six times the imports implying that most of the good imported is

reprocessed and exported to the rest of the world.

United States of America is the major importer of the good holding 17% share in the total

exports of the good by China. While India holds only 2.33% share in the exports by

China.

Further going to 4 digit level, we can find out India’s potential in the production of the

good. China is a major exporter of the good and India imports only small amounts from

26

China. Being a vital commodity for a nation, a deep analysis at the 4 digit level would be

beneficial, is covered in further sections.

GOOD 4

HS Code – 74

Product Label – Copper and articles thereof

Export destinations

for China

Value of exports


Value of imports

(2015)

Taipei, Chinese 659808 Chile 8597731

Hong Kong, China 545104 Japan 3169207

Korea, Republic of 463043 Australia 2445687

Malaysia 443371 Taipei, Chinese 2045439

United States of

America 415374 Korea, Republic of 1998130

The good is not among the top exported commodities of China.

China exports only 56,24,280 USD thousand and imports 3,83,88,289 USD thousand of

the good implying a huge trade deficit.123

The amount of exports can be tapped by India on analysis of Comparative Advantage

because of high dependency of China on other nations, it being a net importer.

GOOD 5

HS Code – 75

Product Label – Nickel and articles thereof

Export destinations

for China

Value of exports


Value of imports

(2015)

India 123891 Russian Federation 2282462

Korea, Republic of 119253 Canada 453639

Taipei, Chinese 94770 Australia 361623

Belgium 71764 United States of

America 265066

Netherlands 62548 Japan 246519

27

China imports 51,98,241 USD thousands and exports only 7,71,566 USD thousand of the

good. Thus, China is a net importer of the good, just like Copper.

India holds the maximum share in total exports of this good. However, this amount is

quite small.

India exports this good to the world with a value comparable to China’s exports of the

good with a value of 7,51,084 USD thousand.

With this comparable figure, we can find which nation is more competitive in the

production of the nickel and related articles.

GOOD 6

HS Code – 76

Product Label – Aluminum and articles thereof


China

Value of

exports (2015) Suppliers to China

Value of imports

(2015)

United States of America 3033914 United States of

America 1313901


Japan 1570672 Japan 850798

Hong Kong, China 1144360 Australia 530430

Malaysia 947470 Hong Kong, China 449002

China is a net exporter of aluminum and related goods. It exports the good in huge

amounts – 2,38,19,933 USD thousand as compared to the tiny import value – 69,31,158

USD thousands.

Total value of the good exported by India is 36,12,252 USD thousands.

This value clearly incomparable to the exports by China. Further analysis at 4 digit level

would be beneficial to know whether India has potential to produce any of the categories

of the good or not.

28

GOOD 7

HS Code – 78

Product Label – Lead and articles thereof

Although China is net exporter of this commodity. Both import and export values are not

very large, with imports equal to 48,265 USD thousands and exports slightly more than

thrice the amount of exports at 1,60,390 USD thousands.

The global export market of the good has a value of 67,27,165 USD thousand out of

which China’s export to the rest of the world form a small share only.

Further analysis of China’s competitiveness and other nations in this context is thus vital.

GOOD 8

HS Code – 79

Product Label – Zinc and articles thereof

China is a net importer of the good with imports amounting to 14,43,786 USD thousands and

exports at 5,25,749 USD thousands only.


China

Value of exports


Value of

imports(2015)

Viet Nam 51446 Canada 15091

Taipei, Chinese 30836 Belgium 8070

Indonesia 21362 Japan 4102

Thailand 18120 Korea, Republic of 2675

Hong Kong, China 7376 Germany 2033


China

Value of exports


Value of imports

(2015)

Taipei, Chinese 91137 Australia 341346

Indonesia 50683 Korea, Republic of 299896

United States of America 48976 Kazakhstan 281365

India 46959 India 186182

Malaysia 39828 Japan 94842

29

India exports the good to China as well as imports it from China.

The amount of exports by India to rest of the world in 2015 is 6,91,901 USD thousand

greater than China’s exports.

Both the nations are dependent on each other for the imports of the good.

Use of comparative advantage would be advantageous to find which nation has more

potential to produce and export the good.

GOOD 9

HS Code – 80

Product Label – Tin and articles thereof

The imports of the good by China amount to 3,25,364 USD thousand, five times the

value it exports to the rest of the world.

Also the good has the second last rank in the exports if seen in value terms.

Again, huge reliance on other nations for the good reflects opportunities for other nations

after justifiable analysis on potential and prices.

GOOD 10

HS Code – 81

Product Label – other base metals, cermets and articles thereof


China

Value of exports


Value of imports

(2015)

Singapore 10745 Indonesia 65258

Netherlands 9649

Bolivia, Plurinational

State of 49396

United States of America 7031 Japan 44066

South Africa 6761 Malaysia 43283

Hong Kong, China 4145 Taipei, Chinese 34079


China

Value of exports


Value of imports

(2015)

Netherlands 418573

Congo, Democratic

Republic of the 746351

30

China as a supplier to china reflects the activity of re-importing the good.

The total export and import values of the good are 28,39,108 and 17,95,828 USD

thousand respectively.

Though, China is a net exporter of the good, the activity of re-importing implies China’s

dependency on other nations which must be taken into account to see potential of other

nations.

GOOD 11

HS Code – 82

Product Label – Tools, implements, cutlery etc. of base metal


China

Value of exports


Value of imports

(2015)


Germany 816992 Germany 676665

Japan 535543 Korea, Republic of 494371

United Kingdom 529176 Taipei, Chinese 347984

Netherlands 457004 United States of America 282964

China’s imports and exports are 3,42,884USD thousands and 1,46,19,156USD thousands

respectively implying that China is net exporter of the good.

The good is not among the top exported commodities of China.

India’s exports of the good are 7,88,040USD thousand, which is less than China’s

exports. Thus, we need go to 4 digits to see if there are any opportunities for India.

GOOD 12

HS Code – 83

Product Label – Miscellaneous articles of base metal

United States of America 385077 United States of America 288382

Japan 321104 Japan 148651

Korea, Republic of 286176 China 140604

Canada 160813 Germany 72196

31


China

Value of exports


Value of imports

(2015)

United States of America 3789113 Germany 277222

Germany 725098 Korea, Republic of 264134

United Kingdom 706851 Japan 203479

Viet Nam 706802 United States of America 164384

Malaysia 679642 China 151808

The good is not among the top ten exported commodities of China; still it contributes to

the export basket because of its huge value.

The value of the exports has been increasing for the past many years, the value in 2015

was 1,85,09,653USD thousands. China’s imports of the good are 17,00,669. Thus, China

is net exporter of the good.

India’s exports were 5,08,272USD thousands, which is very small compared to China’s

exports.

An analysis at 4 digits would be beneficial to see India’s comparative advantage, if any.

GOOD 13

HS Code – 84

Product Label – Machinery, nuclear reactors, boilers etc.

On value basis, the good is the third largest imported commodity by China. The value of

imports was 15,71,89,653USD thousands in 2015. Also, the value has been declining

since 2011.

It is the second largest exported commodity by China on value basis with value of

36,45,36,627 USD thousands. The exports are more than double the value of imports.


China

Value of exports


Value of imports

(2015)


Hong Kong, China 47070190 China 21109608

Japan 22045651 Germany 20816539

Netherlands 16734800 Korea, Republic of 17474331

Germany 15350774 United States of America 15875513

32

For India, it is the fourth largest exported commodity with a value of 1,32,31,404 USD

thousands. There is an increasing trend in the exports since 2011.

The value of Indian exports is small compared to Chin’s exports. But the increasing trend

of exports reflects are increasing potential which can be covered at 4digits analysis of the

good.

GOOD 14

HS Code – 85

Product Label – Electrical, electronic equipment


China

Value of exports


Value of imports

(2015)

Hong Kong, China 175550948 China 96290637

United States of America 95643379 Taipei, Chinese 88988330


Japan 33829269 Japan 38753074

Taipei, Chinese 18649967 Malaysia 32608179

It is the top exported commodity of China with a value of 60,02,92,287USD thousands.

This is a huge value despite the slowdown. Also, an increasing trend is witnessed for past

many years.

It is also the top exported commodity of China with export value amounting 43,16,10,860

USD thousands. Thus, China is net exporter of the good.

For India, it is among the top ten exported items, with a value of 79,35,913 USD

thousands.

The value of India’s exports has been declining gradually since 2011. Thus, we are far

behind China and further analysis on 4 digits is required.

GOOD 15

HS Code – 86

Product Label – Railway, tramway locomotives, rolling stock, equipment

33


China

Value of exports


Value of

imports (2015)



Denmark 783222 Italy 129473

Singapore 673946 Austria 78613

Argentina 624046 United States of America 70240

The good is not among the top exported commodities of China with an export value of

1,24,08,623USD thousands. The imports stand at value of 13,50,181USD thousands.

Also, declining trend has been observed in the imports of the commodity by China.

India’s exports have witnessed a declining trend for the past 5 years with a value of

84,151USD thousands.

We don’t have much potential as per the figures. However,4 digits analysis would be

advantageous to remove any ambiguity.

GOOD 16

HS Code – 87

Product Label – Vehicles other than railway, tramway


China

Value of exports


Value of imports

(2015)


Japan 3875101 United States of America 13198602

Viet Nam 2664837 Japan 12378162

Mexico 1816178 United Kingdom 6755625

Iran, Islamic Republic of 1771436 Korea, Republic of 5025637

The good is among the top ten exported commodities of China with an export value of

6,26,51,637USD thousands. Despite slowdown, there hasn’t been much decline in the

value of exports.

The imported value of the good is 6,96,07,641USD thousands implying China is a net

importer of the good with marginally greater than exports.

34

India’s exports were 1,40,81,904USD thousands in 2015 and it is the third largest

commodity exported by India.

The export value implies a possible potential which can be assured at the 4 digits

analysis.

GOOD 17

HS Code – 88

Product Label – Aircraft, spacecraft and parts thereof


China

Value of exports


Value of imports

(2015)

Hong Kong, China 1015447 United States of America 17622577

United States of America 894952 France 6059091

Germany 313984 Germany 2758005

France 224576 Canada 497914

Lao People's Democratic

Republic 151330 United Kingdom 295352

China is a net importer of the commodity with exports at 34,83,943USD thousands and

import value at 2,80,03,773USD thousands. Also, it is among the top imported

commodities of China.

India’s exports are 37,84,100 USD thousands, marginally greater than China’s exports.

India’s greater export value implies possible potential for India to replace China.

Analysis at 4 digits is must here.

GOOD 18

HS Code – 89

Product Label – Ships, boats and importing structures


China

Value of exports


Value of imports

(2015)


Singapore 5516016 Norway 197840

35


China

Value of exports


Value of imports

(2015)

Marshall Islands 2932388 Singapore 129586

Malta 1477282 Korea, Republic of 57010

Bahamas 1113540 United States of

America 53757

It is one of the top exported commodities by China with export value of 2,87,94,779USD

thousands. China’s imports were 10,03,049USD thousands. There is huge divergence

between exports and making it net exporter of the good.

For India, although the good is among the top exported commodities, but the export value

of 40,63,750USD thousands is less than China’s exports.

India’s potential, if any, can be explored at 4 digits only.

GOOD 19

HS Code – 90

Product Label – Optical, photo, technical, medical etc. apparatus


China

Value of exports


Value of imports

(2015)

Hong Kong, China 18948126 Korea, Republic of 21042147

United States of America 9934761 Taipei, Chinese 15531868

Japan 4831325 Japan 14521257

Korea, Republic of 4273085 China 12881571

Mexico 3201203 United States of America 11324007

It is the sixth largest exported commodity of China with export value of 7,37,79,680 USD

thousands, which is a huge value despite the slowdown.

In the context of imports, it is the fourth largest imported commodity with import value

of 9,97,21,428 USD thousands. Thus, China is a net importer of the good.

India’s exports were 23,21,575USD thousands reflecting lack of potential to wipe out

China.

4 digits analysis is vital to check any possible potential in the further categories of the

good.

36

GOOD 20

HS Code – 91

Product Label – Clocks and watches and parts thereof

Chinese exports of the good were 57,75,587USD thousands and imports were

9,97,21,428 USD thousands. Imports are very large as compared to the exports.

China is a net importer of the good. However Indian exports in 2015 were only 99,397

USD thousands. Moreover, the good is one of the least exported commodities of India.

The possibility of India having potential is bleak here.

GOOD 21

HS Code – 92

Product Label – Musical Instruments, parts and accessories

Export destinations

for China

Value of exports


Value of imports

(2015)

United States of


Germany 138217 Indonesia 91496

Japan 100415 Germany 36303

United Kingdom 70237 Korea, Republic of 22959

Indonesia 59617 Taipei, Chinese 18820

For China, it is the commodity exported with the least value which is 16,90,286USD

thousands. The value of imports is 3,37,304 USD thousand along with an increasing trend

of imports.


China

Value of exports


Value of imports

(2015)

Hong Kong, China 2852269 Switzerland 1802399

United States of America 593344 China 855328

Japan 327998 Japan 494934

Germany 183414 Thailand 107097

Switzerland 124978 Singapore 47262

37

Though china is a net exporter of the good, it is not of much importance to china’s trade

reflected by the small import and export values.

India’s exports were only 19,877 USD thousands, which is a small value.

It would be hard to increase the value in short run. Thus, there is possibly not much

potential for India.

GOOD 22

HS Code – 93

Product Label – Arms and ammunitions, parts and accessories thereof

Export destinations

for China

Value of exports


Value of imports

(2015)

United States of

America 108529 Italy 2817

Hong Kong, China 11286 Germany 2653

Germany 6173 Switzerland 1166

Sudan (North + South) 4750 Austria 511

Brazil 3258 United States of

America 150

It is one of exported goods by China which have small values. The value of exports in

2015 was 1,69,511USD thousands.

It is the commodity which has least value in the imports which is 7,647USD thousands

only. Though, China is a net exporter of the good, it is not of much importance to China’s

trade.

In India, the value of the exports of the good has been increasing since 2011. The value in

2011 was 28,234USD thousands only, which has now propped up to 1,20,769USD

thousands.

With the India’s exports value tending towards that of China, that is possible potential for

India and prospects of competition between India and China.

38

GOOD 23

HS Code – 94

Product Label – Furniture, lighting, signs, prefabricated buildings

Export destinations

for China

Value of exports


Value of imports

(2015)

United States of



America 387691

United Kingdom 4685677 Italy 338706


Singapore 3180699 Korea, Republic of 204795

It is the third largest commodity in value terms, exported by china with a value of

9,87,34,456 USD thousands. Exports dipped from 2014 to 2015, but remained same on

an average since 2011.

The imported value was 32,33,846USD thousands making China a net exporter of the

good.

India’s exports exhibit an increasing trend in terms of value. In 2011, the exported value

was 9,01,083USD thousands only which has now increased to 12,63,198USD thousands.

There is wide lag between India and China’s exports which can be overcome in the

coming years reflecting possible potential for us.

GOOD 24

HS Code – 95

Product Label – Toys, games, sports requisites

Export destinations

for China

Value of exports


Value of imports

(2015)

United States of

America 15182672 China 601255

Netherlands 2486927 Japan 280097

United Kingdom 2477334 Taipei, Chinese 218157

Hong Kong, China 2199657 United States of 144876

39

Export destinations

for China

Value of exports


Value of imports

(2015)

America

Japan 2179100 Philippines 74969

It is among the top exported commodity of China with export value of 4,27,39,073USD

thousands. There is an increasing trend in the exports despite the slowdown.

The imported value of the good is 17,95,828USD thousands. Thus, China is a net

exporter of the good.

India’s export are 2,85,489USD thousands only. Thus, we lag behind China as there has

not been much increase in India’s exports for the past many years.

GOOD 25

HS Code – 29

Product Label – Organic chemicals

Export destinations

for China

Value of exports


Value of imports

(2015)

India 5948956 Korea, Republic of 10628718

United States of


Japan 2871942 Taipei, Chinese 5441232

Korea, Republic of 2238948 Saudi Arabia 4913589

Netherlands 1817236

United States of

America 3159059

China exported 4,26,83,948USD thousands of the good. Also, the value dropped only

slightly as compared to 2014.

The imports stood at 4,78,78,739USD thousands. China is net importer of the good

despite the fall in the value of imports which was 6,03,15,745USD thousands in 2014.

On the value basis, it is the sixth largest commodity exported by India with a value of

1,12,98,856USD thousands. The export figure is less than that of China.

4 digit analysis would be beneficial to remove any ambiguituy.

40

GOOD 26

HS Code – 30

Product Label– Pharmaceutical products

Export destinations

for China

Value of exports


Value of imports

(2015)

United States of


Australia 557039 United States of

America 3279446

Korea, Republic of 400078 France 1621312

Hong Kong, China 341448 Italy 1566142

India 261877 United Kingdom 1119780

For India, the good is the fifth largest exported commodity. An increasing trend in the

exports was witnessed with export value of 1,32,31,404USD thousand. Also india

imports the good from China.

Although China exports the good to India, its total exports are 63,00,753USD thousands

less than that of Indian exports.

Also the good is among the top imported commodities of China. The imports exhibit an

increasing trend with an import value of 1,92,27,237USD thousands.

India surely has potential to tap China’s exports destination.

GOOD 27

HS Code – 40

Product Label – Rubber and articles thereof

Export destinations

for China

Value of exports


Value of imports

(2015)

United States of

America 3986233 Thailand 4007991

Mexico 745700 Japan 1589110

United Kingdom 740049 Malaysia 1433238


America 1148010

Australia 600540 Korea, Republic of 998612

41

It is among the top exported commodities of China with export value of 2,03,58,587USD

thousands. The imports have been decreasing. The imported value was 1,41,57,608USD

thousands as compared to the value in 2011 which was 2,30,62,948USD thousands.

The declining imports and China being a net exporter of the good imply self-sufficiency

of China in the good.

India’s exports were 23,61,582USD thousands, which is very less compared to that of

China’s exports. Thus, we may be able to compete in the long run and a 4 digit analysis

will provide surity.

GOOD 28

HS Code – 48

Product Label – Paper and paperboard, articles of pulp, paper and board

Export destinations

for China

Value of exports


Value of imports

(2015)

United States of

America 3397650

United States of

America 901148


Japan 1148507 Sweden 431794

Australia 824658 Taipei, Chinese 270581


China’s exports have an increasing trend despite the slowdown with an export value

of1,88,49,402 USD thousands. The imports exhibit a declining trend with export value of

40,46,924 USD thousands. Both these imply China being self-sufficient in the

production of good.

India’s exports exhibit an increasing trend since 2011. The value of exports in 2011 was

9,06,989 USD thousands and in 2015 it was 11,27,620 USD thousands. Though. India’s

exports have increased; they are less than China’s exports. Thus, India may be able to

wipe out China in long run. Also, 4 digit analysis is vital in this context.

42

6. INDIA’s OPPORTUNITY

6.1. Comparison of China and India’s RCA for the potential goods

4 digits analysis is essential to be sure of India’s capability without any ambiguity. The RCAs of

the commodities presented in section 2 are calculated at 4 digits level. Next, the commodities for

which India’s RCA is greater than 1 are identified. For these commodities, China’s RCA is also

calculated. Finally, commodities where we have RCA greater than that of China are identified

with the purpose of increasing our exports to those nations where China currently supplies. Also,

an analysis of the tariff lines imposed by the importing nations is done to support the arguments

presented.

6.1.1. Agricultural goods

Within the Agricultural Sector, based on previous elimination, 109 goods at HS-4 Digit level

were looked at, out of which in 33 goods, India has an RCA greater than 1, and for the remaining

76 goods, India has an RCA less than 1.And, India has RCA greater than 2 for 20 goods, and

RCA greater than 4 for 13 goods at HS-4 Digit level.

HS

Code Product Label

India’s exports

of the good

World’s export

of the good

India’s

RCA

0202 Meat of bovine animals, frozen 4030559 22469476 11.08

0204

Meat of sheep or goats - fresh,

chilled or frozen 128285 6201796 1.28

0303 Fish, frozen, whole 582264 20244417 1.78

0306 Crustaceans 3195660 23777087 8.30

0307 Moluscs 528105 11631337 2.80

0701 Potatoes 54484 3317950 1.01

0703

Onions, garlic and leeks, fresh

or chilled 432234 5989886 4.46

0711

Vegetables, provisionally

preserved (unfit for immediate

consumption) 66712 587707 7.01

0712 Dried vegetables 148837 4218403 2.18

0713 Dried vegetables, shelled 209182 10648622 1.21

43

HS

Code Product Label

India’s exports

of the good

World’s export

of the good

India’s

RCA

0801

Brazil nuts, cashew nuts &

coconuts 880738 6065549 8.97

0804

Dates, figs,pineapples,

mangoes, avocadoes, guavas 186969 8730316 1.32

0901 Coffee 540738 30535715 1.09

0902 Tea 677933 6143342 6.82

0904 Pepper, peppers and capsicum 877680 4623141 11.73

0907 Cloves 6550 366994 1.10

0908 Nutmeg, mace and cardamons 116764 641724 11.24

0909

Seeds of anise,

badian,fennel,coriander,

cumin, etc. 321764 683750 29.07

0910

Ginger,saffron,turmeric,

thyme, bay leaves & curry 372118 2213452 10.38

1006 Rice 6380082 20048339 19.66

1008

Buckwheat, millet and canary

seed 38055 1067203 2.20

1503

Lard

stearin&oil,oleostearin&oil&ta

llow oil 1326 51766 1.58

1504

Fish/marine

mammal,fat,oils&their

fractions 36626 1801767 1.26

1508 Ground-nut oil&its fractions 7437 352602 1.30

1515

Fixed vegetable fats&oils &

their fractions 734062 3673923 12.34

1516

Animal or veg fats, oils&fract,

hydrogenated 63182 3616262 1.08

1518

Animal or vegetable fats & oils

chemically modified; inedible

mixtures 32570 1707852 1.18

1701

Cane or beet sugar and

chemically pure sucrose, in

solid form 1186417 21619198 3.39

1702

Sugars,nes,incl chem pure

lactose etc; artif honey;

caramel 94977 5143803 1.14

44

HS

Code Product Label

India’s exports

of the good

World’s export

of the good

India’s

RCA

1703

Molasses resulting from the

extraction or refining of sugar 44714 811973 3.40

2001

Cucumbers, gherkins and

onions preserved by vinegar 145067 1868663 4.79

2007

Jams,fruit jellies &

marmalades 132732 3020003 2.71

2101

Extracts essences &

concentrates of coffee and tea 307247 7574666 2.51

HS CODE INDIA'S RCA CHINA'S RCA

0202 11.08 0.01

0204 1.28 0.04

0303 1.78 0.90

0306 8.30 0.52

0307 2.80 2.10

0701 1.01 0.49

0703 4.46 2.85

0711 7.01 2.08

0712 2.18 4.77

0713 1.21 0.43

0801 8.97 0.00

0804 1.32 0.03

0901 1.09 0.05

0902 6.82 1.61

0904 11.73 0.49

0907 1.10 0.01

0908 11.24 0.01

0909 29.07 0.21

0910 10.38 1.56

1006 19.66 0.10

1008 2.20 0.29

1503 1.58 0.00

1504 1.26 0.66

1508 1.30 0.48

1515 12.34 0.23

1516 1.08 0.00

1518 1.18 0.28

1701 3.39 0.02

1702 1.14 0.92

1703 3.40 0.10

45

HS CODE INDIA'S RCA CHINA'S RCA

2001 4.79 0.60

2007 2.71 0.20

2101 2.51 0.31

Out of these 33 commodities, 32 products were such for which India’s RCA was greater than

China’s RCA, clearly indication India’s existing market.

For HS Code 02, there were two products for which India’s RCA was greater than

China’s RCA, which consisted of Meat of bovine animals, frozen (0202) and Meat of

sheep or goats - fresh, chilled or frozen(0204).Among China’s top exporters , its

dominant part goes to Macau and Hong Kong. Since, it would always be beneficial for

these countries to continue their purchase from China because of the distance between

India and them being thrice than that between China and them. Hence, the remaining

markets to strengthen trade ties include Kryygzstan, Malaysia and Russian Federation.

For HS Code 03, the three products for which India’s RCA exceeded that of China’s was

Fish, frozen, whole(0303), Crustaceans(0306) and Live fish(0307).The main exporters

for this products are Japan and United States of America. Owing to China’s greater

concentration in the sector, this is hard to capture. Among other nations, economies to be

looked at in the first phase could be Thailand, because of its partial land-lockedness by

Vietnam and Cambodia; it may not venture more into increasing its own potential and

may depend on exports.

For HS code 07, India fares better than China in Potatoes(0701), Onions, garlic and leeks,

fresh or chilled(0703), Vegetables, provisionally preserved (unfit for immediate

consumption (0711), Dried vegetables(0712)and Dried vegetables, shelled(0713).

China’s major exporter for the commodity is Thailand, which is difficult to tap because

of closer geographical proximity of China as compared to that of India’s. Then, only

potential untapped markets remaining are Russian federation and Malaysia.

For HS Code 08, India’s RCA is greater than China for Brazil nuts, cashew nuts &

coconuts (0801) and Dates, figs, Pineapples, mangoes, avocadoes, guavas (0804).

For HS Code 09, there were seven products for which India’s RCA exceeded that of

China, and these at 4 digit HS Codes are Coffee(0901),Tea (0902), Pepper, peppers and

46

Capsicum (0904), Cloves (0907), Nutmeg, mace and Cardamoms (0908), Nutmeg, mace

and Cardamoms (0909) and Ginger, Saffron, Turmeric, thyme, bay leaves & curry(0910).

With the increasing trade relations with United States of America, India could capture a

significant share of United States of America’s market, presently being captured by

China.

For HS Code 10, had only two products for which India fares more competitive as

compared to China, and these were Rice (1006) and Buckwheat, miller and canary seed

(1008).The major potential markets for this sector are Pakistan and Republic Of Korea.

Other China’s major exporters also include Vietnam and Hong Kong, but because of its

closer geographical location to China, this couldn’t serve to be the initial markets of

access.

For HS Code 15, India is better than China for five products, and these include Lard

Stearin &oil, Oleostearin &oil & tallow oil (1503), Fish/marine Mammal, Fat, Oils &

their fractions(1504), Ground-nut oil & its fractions(1508), Fixed vegetable fats &oils &

their fractions(1515), Animal or Veg fats, oils & fract, hydrogenated (1516) and Animal

or vegetable fats & oils chemically modified; inedible mixtures(1518). Among the

NAFTA countries, major markets include Canada and United States of America. Chile

could be another potential market where India can increase trade strength.

For HS Code 17, there are three products in which India’s RCA exceeds that of China’s,

and these include Cane or beet sugar and chemically pure sucrose, in solid form (1701),

Sugars,nes,incl chem pure lactose etc; artif honey; caramel(1702) and Molasses resulting

from the extraction or refining of sugar(1703). For the product, India’s production as well

as consumption is at higher notches, thus, leaving not much to increase its trade volume.

However, the smaller markets where exports could be widened to include Malaysia and

Australia.

For HS Code 20, there were two products for which India’s RCA fares better than China,

and these are Cucumbers, gherkins and onions preserved by vinegar (2001) and Jams,

fruit jellies & marmalades (2007).Since, China’s exports in the sector are dominated by

Japan and united States of America, not much trade potential exists within this sector

because of the stringent and easily-observable Sanitary & Phyto- Sanitary standards of

these economies.

47

For HS Code 21, there is a single product in which India has a comparative advantage, it

is, Extracts essences & concentrates of coffee and tea (2101). Having only single good

within the sector where India fares better throws light on the fact that trade within this

sector may not turn fruitful for India. However, Philippines and Republic Of Korea could

be initial target markets. And, with further advancement and development, the sector can

be opened to trade with United States of America and Japan.

6.1.2. Non-agricultural goods

RCA of 340 commodities at 4 digits level is calculated out of which 132 commodities have

RCA>1 indicative of India’s potential.

Following is the table of non-agricultural products with RCA>1:

HS Code Product Label India’s exports

of the good

World’s exports

of the good

India’s

RCA

2902 Cyclic hydrocarbons 1343619 39070912 2.12

2903

Halogenated derivatives of

hydrocarbons 155605 7585861 1.27

2904

Hydrocarbon derivatives,

sulfonated, nitrated 138046 1520802 5.61

2906

Cyclic alcohols&their

derivatives 213197 1773850 7.42

2907 Phenols; phenol-alcohols 163739 4722287 2.14

2908 Derivatives of phenols 33313 370011 5.56

2909

Ethers, ether-alcohols, ether-

phenols & peroxides & thier

derivatives 286103 16074469 1.10

2911

Acetals & hemiacetals &

their derivatives 7566 83838 5.57

2912

Aldehyde;cyclic polymer of

aldehyde;paraformaldehyde 95025 1820425 3.22

2913

Derivatives of aldehydes,

cyclic polymers of

aldehydes; etc 8700 75642 7.10

2914

Ketones & quinones, & their

derivatives 301138 5157548 3.61

2915

Saturated acyclic

monocarboxylic acids &

their derivatives 535132 11976652 2.76

48


of the good

World’s exports

of the good

India’s

RCA

2917

Polycarboxylic acids, their

anhydrides, halides etc &

their derivative 228697 10277211 1.37

2918

Carboxylic acids & their

derivatives 315264 6478425 3.01

2920

Esters of inorganic acids nes,

their salts and their

derivatives 95108 1422187 4.13

2921 Amine-function compounds 394565 7889021 3.09

2922

Oxygen-function amino-

compounds 420940 18064169 1.44

2923

Quaternary ammonium salts

& hydroxides; lecithins 138786 1630085 5.26

2924

Carboxyamid-functn

compound;amide function

compound of carbonic acid 266270 7140523 2.30

2925

Carboxyimide-function

compounds; imine-function

compounds 111084 1296792 5.29

2927

Diazo-, azoor azoxy-

compounds 26671 494249 3.33

2928

Organic derivatives of

hydrazine or of

hydroxylamine 40256 1403731 1.77

2930 Organo-sulphur compounds 104611 6116867 1.06

2931

Organo-inorganic

compounds, nes 106644 6012848 1.10

2932

Heterocyclic compounds

with oxygen hetero-atom(s)

only 239917 6147063 2.41

2933

Heterocyclic compounds

with nitrogen hetero-atom;

nucleic acids & thei 1580901 57869465 1.69

2934 Heterocyclic compounds, nes 437932 19952929 1.36

2935 Sulphonamides 170952 9559608 1.10

2936

Provitamins&vitamins,

natural/reproduced by

synthesis 165110 5481181 1.86

2939

Vegetable alkaloids&their

salts, ethers, esters & other 195981 1996086 6.06

49


of the good

World’s exports

of the good

India’s

RCA

derivatives

2941 Antibiotics 851423 11074198 4.75

2942 Organic compounds, nes 1301232 1895791 42.39

3003

Medicament mixtures (not

3002, 3005, 3006) not in

dosage 328583 13104672 1.55

3004

Medicament mixtures (not

3002, 3005, 3006), put in

dosage 11235590 322059374 2.15

4003

Reclaimed rubber in primary

forms or in plates, sheets or

strip 70856 322723 13.56

4008

Plate,sheet,strip,rods of

vulcanised rubber other than

hard rubber 69573 3838520 1.12

4010

Conveyor or transmission

belts or belting of vulcanised

rubber 109335 5124625 1.32

4011

New pneumatic tires, of

rubber 1355829 71920031 1.16

4012

Retreaded/used tire;solid

tire,interchangeable tire

treads& flaps 42105 2324082 1.12

4013 Inner tubes of rubber 74108 1184614 3.86

4014

Hygienic/pharmaceutical art

of vulcanised rubber 52272 1088563 2.97

4820

Registers,acct,note,order

books etc;other stationary

articles of paper 119141 4142303 1.78

4823

Other paper, paperboard,

cellulose wadding cut to size

& adhesive pape 248741 7616889 2.02

7102

Diamonds, not mounted or

set 21873250 121072482 11.16

7103

Precious & semi-precious

stone,not strug, 478793 8804425 3.36

7104

Syn/reconstr prec/semi-prec

stones, not strg/mounted/set 44249 1319791 2.07

7107

Base metals clad with silver,

nfw than semi-manufactured 2747 92164 1.84

7108

Gold unwrought or in semi-

manuf forms 5311678 297121521 1.10

7112 Waste & scrap of precious 448813 14218710 1.95

50


of the good

World’s exports

of the good

India’s

RCA

metal

7113

Articles of jewellery&parts

thereof 9991656 97714928 6.32

7114

Articles of

goldsmith's/silversmith's

wares&pts 37095 835022 2.74

7117 Imitation jewellery 276911 7981127 2.14

7201

Pig iron and spiegeleisen in

pigs 142885 3842844 2.30

7202 Ferro-alloys 1311208 22105460 3.66

7203

Ferrous prod obt by dir

reductn of iron ore

(minimum pure iron of 99.9 45101 1890156 1.47

7207

Semi-finished products of

iron or nonalloy steel 288915 16407661 1.09

7208

Flat-rolld products of

iron/non-al/s

wdth>/=600mm,hr,not clad 764960 38271614 1.23

7209

Flat-rolld prod of iron/non-

alloy steel

wd>/=600mm,cr,not clad 341253 13992390 1.51

7210

Flat-rolled prod of iron or

non-al/s wd>/=600mm,clad,

plated or coated 1292108 42085997 1.90

7215

Bars & rods of iron or non-

alloy steel nes 37784 2146778 1.09

7220

Flat-rolled products of

stainless steel, of a width of

less than 600mm 138973 4209699 2.04

7221

Bars&rods, hot-rolled, in

irregularly wound coils, of

stainless steel 83726 1776287 2.91

7222

Bars & rods of stainless steel

nes; angles, shapes 652684 5327719 7.57

7223 Wire of stainless steel 243618 2000152 7.52

7303

Tubes, pipes and hollow

profiles, of cast iron 125201 1619599 4.77

7305

Tubes&pipe nes, ext diam

>406.4mm,of iron &steel 653835 8934159 4.52

7306

Tubes, pipes and hollow

profiles of iron or steel, nes 368480 20006307 1.14

7307

Tube or pipe fittings, of iron

or steel 505431 17372296 1.80

7308 Structures (rods,angle, 994572 47589324 1.29

51


of the good

World’s exports

of the good

India’s

RCA

plates) of iron & steel nes

7311

Containers for compressed or

liquefied gas, of iron or steel 117799 3308087 2.20

7318

Iron & steel

screws,bolts,nuts,coach-

screws, etc 552017 33704403 1.01

7319

Iron & steel sewing/knitting

needle& sim art for hand use 7401 265738 1.72

7323

Iron & steel tables &

household articles 589081 11318325 3.21

7325

Cast articles of iron or steel

nes 1019979 6396145 9.85

7326 Articles of iron or steel nes 937676 44426284 1.30

7401

Copper mattes; cement

copper (precipitated copper) 8933 485767 1.14

7403

Refined copper and copper

alloys, unwrought 1936165 54457944 2.20

7405 Master alloys of copper 4485 212361 1.30

7415

Nail,tack, etc of copper or

iron, with head of copper 28536 939194 1.88

7418

Copper table, kitchen,


7419 Articles of copper nes 442032 3395661 8.04

7502 Unwrought nickel 715387 14746634 3.00

7601 Unwrought alumimum 1521190 48798098 1.93

7603

Aluminum powders and

flakes 13281 445551 1.84

7614

Aluminum stranded

wire,cables,plaited bands,

not elec insulated 250420 1533166 10.09

7615

Aluminum table, kitchen,


7616 Articles of aluminum nes 368008 16038426 1.42

7801 Unwrought lead 170694 5543468 1.90

7901 Unwrought zinc 670457 11151381 3.71

7904

Zinc dust, powders and

flakes 7411 304084 1.51

8101

Tungsten (wolfram) and

articles thereof, including

waste and scrap 17868 763815 1.44

8110

Antimony and articles

thereof, including waste and

scrap 14929 174522 5.28

52


of the good

World’s exports

of the good

India’s

RCA

8201

Hand tools of a kind used in

agriculture horticulture or

forestry 45690 1539701 1.83

8203

Files,pliers, pincers,met cut

shears,etc &sim hand tool 62149 2013524 1.91

8204

Hand-op

spanners&wrenches,sockets 139215 2597508 3.31

8205 Hand tools nes; anvils 127099 6947518 1.13

8215

Spoons, forks, butter-knives

and similar kitchen or

tableware 49401 2868617 1.06

8305

Fitting for loose-leaf

binder/file&sim office art;

base metal 24552 947126 1.60

8402

Steam or vapour generatg

boiler; super-heated water

boiler 279303 5565693 3.10

8404

Auxiliary plant for boiler of

hd 8402/03,condenser for

steam power uni 54119 2089351 1.60

8405

Producer gas/water gas gen;

acetylene gas generator 19795 659782 1.85

8406

Steam turbines and other

vapour turbines 102537 5915359 1.07

8410

Hydraulic turbines, water

wheels, and regulators

thereof 68505 1537512 2.75

8437

Machines for cleaning/sort

seed,grain;machinery usd in

the milling ind 60855 2178660 1.73

8444

Machines for

extruding,drawing,text/cuttin

g man-made textile materials 9354 512682 1.13

8445

Machine for preparing textile

fiber;spinning,twisting,windg

mach 200016 3141755 3.93

8446 Weaving machines (loom) 23098 1341541 1.06

8448

Auxiliary machinery

(dobbie/jacquard parts), etc 135032 4487997 1.86

8455

Metal-rolling mills and rolls

therefor 133240 4435684 1.86

8468

Machy&app for

solderg,brazg (o/t those of hd 19946 1012541 1.22

53


of the good

World’s exports

of the good

India’s

RCA

85.15)

8474

Machinery for

sorting/screening/washg;aggl

omeratg/shapg mineral

produc 280869 15504784 1.12

8503

Parts suitable for use

solely/princ with machines

of hd no 85.01/85.02 278062 17027220 1.01

8514

Industrial/laboratory elec

furnaces&ovens 77394 4756890 1.00

8535

Electrical app for switching

(ex fuse,switche,etc)

exceeding 1000 volt 176042 8467213 1.28

8545

Carbon electrodes / brushes /

lamp carbons 196542 4423804 2.74

8546

Electrical insulators of any

material 70650 2300152 1.90

8701

Tractors (other than tractors

of heading no 87.09) 1001842 51893175 1.19

8702

Public-transport type

passenger motor vehicles 260608 15256823 1.06

8706

Chassi fitted with engine for

motor vehicles 350699 3229067 6.71

8710

Tanks and other armoured

fighting veh, motorised, and

parts 38982 1941692 1.24

8711 Motorcycles, side-cars 1783579 20974211 5.25

8714

Parts and accessories of

motorcycles & cycles 403720 18715535 1.33

8802

Aircraft,

(helicopter,aeroplanes) &

spacecraft (satellites) 2437693 122398981 1.23

8805

Aircraft launchg gear;

ground flyg trainer 46658 2093545 1.38

8904 Tugs and pusher craft 388535 4882569 4.91

8905

Light vessel,dredger;floating

dock;floating/submersible

drill platform 2765190 35014626 4.88

8906

Vessels, including warships

and lifeboats other than

rowing boats, nes 504461 3462856 9.00

9028

Gas/ liquid/ electricity

supply/production meter 114011 6440638 1.09

54


of the good

World’s exports

of the good

India’s

RCA

9033

Parts&accessorie for

machines of chap 90, nes 80307 3308990 1.50

9305

Arm parts and accessories

(of hd 93.01 to 93.04) 103776 1337361 4.79

9307

Swords, cutlasses, bayonets,

lances, scabbards & sheaths 5544 84360 4.06

9404

Mattress supports;

mattresses,quilts, etc 363241 15308049 1.47

The following table shows the comparison of India and China’s RCA for the above mentioned

products:

HS CODE RCA India RCA China

2902 2.12 0.10

2903 1.27 1.58

2904 5.61 0.79

2906 7.42 1.59

2907 2.14 0.32

2908 5.56 1.68

2909 1.1 0.36

2911 5.57 1.80

2912 3.22 1.40

2913 7.1 3.45

2914 3.61 1.49

2915 2.76 0.94

2917 1.37 1.07

2918 3.01 2.41

2920 4.13 1.21

2921 3.09 1.61

2922 1.44 1.12

2923 5.26 1.32

2924 2.3 1.51

2925 5.29 1.68

2927 3.33 2.61

2928 1.77 0.70

2930 1.06 1.78

2931 1.1 2.30

2932 2.41 2.45

55


2933 1.69 0.74

2934 1.36 0.80

2935 1.1 0.45

2936 1.86 2.47

2939 6.06 0.56

2941 4.75 2.04

2942 42.39 0.25

3003 1.55 0.33

3004 2.15 0.06

4003 13.56 2.31

4008 1.12 0.47

4010 1.32 1.09

4011 1.16 1.38

4012 1.12 0.55

4013 3.86 3.19

4014 2.97 0.92

4820 1.78 2.81

4823 2.02 2.18

7102 11.16 0.13

7103 3.36 0.37

7104 2.07 1.49

7107 1.84 0.08

7108 1.1 0

7112 1.95 0.03

7113 6.32 1.37

7114 2.74 1.53

7117 2.14 2.38

7201 2.3 0.09

7202 3.66 0.28

7203 1.47 0.05

7207 1.09 0.00

7208 1.23 0.05

7209 1.51 1.11

7210 1.9 1.85

7215 1.09 0.03

7220 2.04 0.50

7221 2.91 0.40

7222 7.57 0.25

56


7223 7.52 0.83

7303 4.77 2.54

7305 4.52 0.87

7306 1.14 1.05

7307 1.8 1.69

7308 1.29 1.8

7311 2.2 1.25

7318 1.01 1.04

7319 1.72 2.57

7323 3.21 4.27

7325 9.85 0.84

7326 1.3 1.25

7401 1.14 0.03

7403 2.2 0.16

7405 1.3 0.12

7415 1.88 1.02

7418 3.1 2.89

7419 8.04 0.56

7502 3 0.3

7601 1.93 0.17

7603 1.84 0.77

7614 10.09 2.56

7615 1.04 3.62

7616 1.42 1.37

7801 1.9 0.13

7901 3.71 0.14

7904 1.51 0.52

8101 1.44 1.56

8110 5.28 1.23

8201 1.83 3.08

8203 1.91 2.52

8204 3.31 2.13

8205 1.13 2.38

8215 1.06 4.76

8305 1.6 3.50

8402 3.1 1.77

8404 1.6 1.67

8405 1.85 0.53

57


8406 1.07 0.83

8410 2.75 1.59

8437 1.73 1.07

8444 1.13 2.38

8445 3.93 0.91

8446 1.06 2.07

8448 1.86 0.95

8455 1.86 1.31

8468 1.22 1.23

8474 1.12 1.35

8503 1.01 1.61

8514 1 0.89

8535 1.28 0.51

8545 2.74 1.78

8546 1.9 1.72

8701 1.19 0.22

8702 1.06 1.08

8706 6.71 0.15

8710 1.24 0

8711 5.25 2.09

8714 1.33 2.13

8802 1.23 0.11

8805 1.38 0.01

8904 4.91 1.18

8905 4.88 1.28

8906 9 1.51

9028 1.09 1.29

9033 1.5 0.89

9305 4.79 0.12

9307 4.06 0.88

9404 1.47 3.68

Out of these 132 products, there are 102 products for which India’s RCA is greater than that of

China.

For HS Code 29, 27 products are identified which consisted of Cyclic alcohols&their

derivatives, Ethers, ether-alcohols, ether-phenols & peroxides & thier derivatives,

58

Phenols; phenol-alcohols, Organic derivatives of hydrazine or of hydroxylamine,

antibiotics, organic compounds nes etc. The markets where India can increase its share of

exports are USA, Japan, Republic of Korea and Netherlands.

For HS Code 30, 2 products - Medicament mixtures (not 3002, 3005, 3006) not in dosage

and Medicament mixtures (not 3002, 3005, 3006), put in dosage – are identified where

India’s RCA was more than China’s. The possible markets for India in the short run are

Republic of Korea and Australia. Again because of high export value of the good from

China to USA, USA can be tapped in the long run.

For HS Code 40, 6 products are identified which are Conveyor or transmission belts or

belting of vulcanised rubber, Reclaimed rubber in primary forms or in plates, sheets or

strip, Plate,sheet,strip,rods of vulcanised rubber other than hard rubber, Retreaded/used

tire;solid tire,interchangeable tire treads& flaps, inner tubes of rubber and

Hygienic/pharmaceutical art of vulcanised rubber. India can tap the markets of Mexico,

Australia, Japan and United Kingdom in the short run. Again, USA with Chinese exports

of 3986233 USD thousand can be extracted only in the long run.

For HS Code 71, 8 products are identified where India has possible potential in

increasing exports. Some of these are Diamonds, not mounted or set, Articles of

jewellery & parts thereof, Waste & scrap of precious metal, Precious & semi-precious

stone, not strug etc. The possible markets where India can increase its exports of this

good are USA, Myanmar, Singapore and Belgium. In the short run, India can easily tap

the markets of Myanmar, Singapore and Belgium as the value of exports from China to

these nations is not very large. Myanmar being the neighboring nation of India has

greater chances of being tapped. However, the markets in USA can be tapped only in the

long run because of huge export potential requirements. In 2015, China’s exports of the

good to USA were 4209520 USD thousand. This value of exports can be attained by

India with time.

For HS Code 72, 12 products consisting of Ferro-alloys, Semi-finished products of iron

or nonalloy steel, Flat-rolld products of iron/non-al/s wdth>/=600mm,hr,not clad, Flat-

rolled prod of iron or non-al/s wd>/=600mm,clad, plated or coated etc are identified

where India could have possible potential to tap the markets of Republic of Korea,

59

Philippines, Vietnam and Thailand. Also, it would be easy to increase Indian exports to

Vietnam and Thailand because of geographical proximity with India.

For HS Code 73, 7 products are identified where India is more competitive than China.

Some of these are Articles of iron or steel nes, Tubes&pipe nes, ext diam >406.4mm,of

iron &steel, Tubes, pipes and hollow profiles of iron or steel, nes and Tube or pipe

fittings, of iron or steel. Japan, republic of Korea, Australia and Germany are the possible

markets for India in the short run and USA could be one of the export destinations in long

run.

For HS Code 74, India is competitive than China in production of 6 commodities –

Copper mattes; cement copper (precipitated copper), Refined copper and copper alloys,

unwrought, Master alloys of copper, Nail,tack, etc of copper or iron, with head of copper,

Copper table, kitchen, household articles and Articles of copper nes. Republic of Korea,

Malaysia and USA are the potential markets for Indian exports.

For HS Code 75, India is competitive than China in production of unwrought nickel (HS

Code 7502) with an RCA of 3. The markets where India can increase its exports are

Netherlands, Belgium and Republic of Korea.

For HS Code 76, Unwrought alumimum, Aluminum powders and flakes, Aluminum

stranded wire,cables,plaited bands, not elec insulated and Articles of aluminum nes are

the goods where India is more competitive than China. Malaysia, Japan, Vietnam and

USA are the potential markets for India’s exports.

For HS Code 78, only unwrought lead is the product (HS Code 7801) where India is

more competitive than China. For this product, Indonesia, Thailand and Vietnam can be

tapped easily. Geographical proximity supports the trade. Also, the exports from China to

these nations are not of very huge values and India can easily produce the good boosting

its revenue.

For HS Code 79, India is competitive than China in production of Zinc dust, powders and

flakes and unwrought zinc. Hence, it can tap the markets of Indonesia, Malaysia and

USA.

For HS Code 81, India is competitive than China in production of Antimony and articles

thereof, including waste and scrap (HS Code 8110) with an RCA of 5.28. China has an

60

RCA of value 1.23 only. India can tap the markets of USA, Japan, Republic of Korea,

Netherlands and Canada in the short run easily.

For HS Code 82, India’s RCA is more than China’s only for Hand-op spanners &

wrenches, sockets (HS code 8204). India can tap the markets of United Kingdom, Japan,

Germany and Netherlands in short run. USA could be an export destination in the long

run however.

For HS Code 84, Producer gas/water gas gen; acetylene gas generator, Steam turbines

and other vapour turbines, Hydraulic turbines, water wheels, and regulators thereof etc.

are the products for which India is more competitive than China. Germany, Netherlands

and Japan are the potential markets in the near future. However it would take time to tap

USA as an export destination.

For HS Code 85, India is competitive than China in production of Industrial/laboratory

elec furnaces&ovens, Electrical app for switching (ex fuse,switche,etc) exceeding 1000

volt, Carbon electrodes / brushes / lamp carbons and Electrical insulators of any material.

Japan and republic of Korea are the possible export destinations for India in short run

whereas USA again due to huge import value of the good, could be tapped later on.

For HS Code 87, India is competitive than China in production of Tractors (other than

tractors of heading no 87.09), Chassi fitted with engine for motor vehicles, Tanks and

other armoured fighting veh, motorised, and parts and motorcycles, sidecars. Japan,

Vietnam, Mexico and Iran can be tapped in the short run. USA could be the potential

market in the long run.

For HS Code 88 Aircraft, (helicopter,aeroplanes) & spacecraft (satellites) and Aircraft

launchg gear; ground flyg trainer are the goods for which India is more competitive than

China. Germany, Laos and France are the potential markets for Indian exports of these

goods. In the long run, USA can also be tapped by India.

For HS Code 89, Tugs and pusher craft, Light vessel,dredger; floating dock;

floating/submersible drill platform and Vessels, including warships and lifeboats other

than rowing boats, nes are the goods for which India is more competitive than China.

Singapore, Marshall Islands, Bahamas and Malta are the markets which India can tap and

increase exports.

61

For HS Code 90, India’s RCA is greater than that of China for Parts & accessories for

machines of chap 90, nes (HS Code 9033). Mexico, Republic of Korea and Japan are the

possible export destinations for India in the near future. Again, USA could be tapped in

the long run because of huge import demand of the good.

For HS Code 93, India has RCA of 4.79 and 4.06 in the production of Arm parts and

accessories (of hd 93.01 to 93.04) and Swords, cutlasses, bayonets, lances, scabbards &

sheaths respectively. These values are greater than China’s RCA. Brazil, Sudan,

Germany and USA are the possible export destinations for India in the near future.

For HS Codes 77,80,83,91,92,94,95,86 no products are identified where India’s RCA was

more than that of China implying China is more competitive than India in producing

these goods. In long run these commodities will be very crucial for India from exports

point of view as they carry an appreciable amount of global exports value.

6.2. Tariff faced by India and China for same product by the importing nations

For the products (at 4 digits level), for which India has more RCA than China, the tariff lines

imposed by the potential markets on China and India are compared. The destinations where less

tariff is imposed on India than on China, it would be beneficial for those nations to import the

good from us, not from China.

6.2.1. Agricultural goods

HS

CODE

Kyrgyzstan

on China

Kyrgyzstan

on India

Malaysia

on China

Malaysia

on India

Russian

Federation

on China

Russian

Federation

on India

0202 20.00 20.00 0.00 0.00 20.00 20.00

0204 11.25 11.25 0.00 0.00 11.25 11.25

Japan on

China

Japan on

India

USA on

China

USA on

India

Republic

of Korea

on China

Republic

of Korea

on India

Thailand

on China

Thailand

on India

0303 4.34 4.18 0.15 0.00 9.99 6.28 0.00 0.85

0306 2.66 1.60 0.43 0.00 19.84 11.18 0.00 3.66

0307 8.18 7.28 0.12 0.00 17.92 9.46 0.00 1.03

Vietnam

on China

Vietnam

on India

Japan on

China

Japan

on India

Malaysia

on China

Malaysia

on India

Republic

of Korea

on China

Republic

of Korea

on India

62

0701 0.00 8.58 3.63 0.00 0.00 0.00 304.00 304.00

0703 0.00 5.00 3.54 1.85 0.00 0.00 146.06 146.06

0711 0.00 13.24 7.80 3.74 0.00 0.00 75.54 72.07

0713 0.00 4.79 72.92 71.91 0.00 0.00 142.55 142.55

Thailand

on China

Thailand

on India

Vietnam

on China

Vietnam

on India

Malaysia

on China

Malaysia

on India

Russian

Federation

on China

Russian

Federation

on India

0801 5.85 14.33 0.00 10.76 0.00 0.43 0.70 0.70

0804 0.00 5.19 0.00 19.76 5.94 3.62 3.05 3.05

Morocco

on China

Morocco

on India

USA on

China

USA on

India

Japan on

China

Japan on

India

Germany

on China

Germany

on India

0901 11.15 11.15 0.00 0.00 2.31 2.31 2.15 0.18

0902 12.59 12.59 0.65 0.00 9.69 8.04 0.37 0.00

0904 17.42 17.42 0.28 0.18 0.00 0.00 2.55 0.64

0907 6.25 6.25 0.00 0.00 0.00 0.00 8.00 2.80

0908 6.25 6.25 0.02 0.00 0.00 0.00 0.00 0.00

0909 15.45 15.45 0.00 0.00 0.00 0.00 0.00 0.00

0910 12.18 12.18 0.99 0.12 1.08 0.69 3.10 0.83

Japan on

China

Japan on

India

Vietnam

on China

Vietnam

on India

Pakistan

on China

Pakistan

on India

Republic

of Korea

on China

Republic

of Korea

on India

1006 119.55 119.55 0.12 19.83 9.92 9.78 513.00 513.00

1008 2.71 1.82 0.00 0.75 4.33 4.33 277.30 276.75

USA on

China

USA on

India

Chile on

China

Chile on

India

Canada on

China

Canada on

India

Republic

of Korea

on China

Republic

of Korea

on India

1503 1.55 1.55 0.00 6.00 7.50 7.50 3.00 0.00

1504 1.76 0.13 0.00 6.00 2.27 2.27 3.00 0.04

1508 3.75 3.75 0.00 6.00 7.45 7.45 27.00 27.00

1515 1.31 0.64 0.00 6.00 5.41 5.41 46.94 45.92

1516 4.81 4.80 0.00 6.00 5.69 5.69 20.28 18.73

1518 5.15 1.15 0.00 6.00 6.25 6.25 7.25 5.00

Philippines

on China

Philippines

on India

USA on

China

USA on

India

Indonesia

on China

Indonesia

on India

Malaysia

on China

Malaysia

on India

Australia

on China

Australia

on India

1701 46.73 46.73 24.75 10.73 14.32 13.08 0.00 0.00 0.00 0

1702 2.69 2.69 15.28 13.12 0.00 2.00 0.00 0.00 2.87 2.87

1703 8.64 8.64 0.22 0.03 0.00 2.69 0.00 0.00 0.00 0

Japan on

China

Japan on

India

USA on

China

USA on

India

Republic

of Korea

on China

Republic

of Korea

on India

Russian

Federation

on China

Russian

Federation

on India

Germany

on China

Germany

on India

63

2001 9.12 5.79 7.75 1.18 30.00 30.00 10.12 10.12 14.74 10.88

2007 21.87 20.55 6.12 4.01 30.00 30.00 7.64 7.64 20.00 20

USA on

China

USA on

India

Japan on

China

Japan on

India

Republic

of Korea

on China

Republic

of Korea

on India

Philippines

on China

Philippines

on India

2101 3.45 2.33 18.49 18.49 11.88 7.06 34.48 34.48

Based on comparison of the tariffs applicable to China and India, we can jot down the goods and

broadly classify them according to the varying degree of advantage received by India as a way of

lower tariff rate applicable to India, as compared to China.

Thus, in the initial phase attention can be paid to escalate trade for goods shaded with pink, as

they indicate a huge market potential. And, later attention can be broadened to other goods

subsequently.

6.2.2. Non-agricultural goods

The table represents the data on equivalent ad-valorem tariffs (in percentage) applied by the

various potential export destinations for India on India and China.

1 It indicates goods for which the difference in tariff applicable to India and China is

roughly near to 1%.

2 It indicates gods for which the difference in tariff applicable to India and China is more

than 1%, but not yet significant.

3 It indicates goods for which the difference in tariff applicable to India and China is

highly significant, and can serve as potential goods to increase trade in initial phase.

64

HS

COD

E

USA on

China

USA on

India

Japan on

China

Japan on

India

Korea

on

China

Korea

on

India

Netherlan

ds on

China

Netherlan

ds on

India

2902 0.00 0.00 0.00 0.00 1.24 0.00 0.00 0.00

2904 3.96 2.67 0.00 0.00 5.25 0.00 5.50 5.50

2906 2.47 1.33 0.61 0.44 5.46 0.00 5.19 5.19

2907 4.94 0.69 0.00 0.00 5.50 0.00 3.98 3.98

2908 4.28 1.03 0.00 0.00 5.06 0.00 5.50 5.50

2909 3.42 0.42 0.00 0.00 5.43 0.00 5.05 5.05

2911 1.77 0.00 0.00 0.00 5.50 0.00 5.00 5.00

2912 4.14 0.23 0.00 0.00 5.43 0.00 5.50 5.50

2913 2.75 1.37 0.00 0.00 5.50 0.00 5.50 5.50

2914 2.93 1.18 0.00 0.00 4.72 0.00 5.38 5.38

2915 3.20 0.28 0.00 0.00 5.43 0.01 5.40 5.40

2917 6.00 4.61 0.00 0.00 6.22 0.06 6.37 6.37

2918 4.09 1.03 1.08 1.08 5.80 0.00 6.39 6.39

2920 3.20 1.19 0.00 0.00 6.00 0.00 6.50 6.50

2921 4.55 2.34 0.00 0.00 5.93 0.00 6.17 6.17

2922 2.67 1.64 0.33 0.21 6.15 0.00 6.23 6.23

2923 2.36 0.00 0.00 0.00 6.50 0.00 6.14 6.14

2924 2.81 1.04 0.00 0.00 5.16 0.58 6.32 6.32

2925 3.44 1.82 0.00 0.00 4.96 0.00 6.09 6.09

2927 3.23 1.71 0.00 0.00 6.50 0.00 6.50 6.50

2928 2.55 0.81 0.00 0.00 5.60 0.00 6.07 6.07

2933 3.28 1.62 0.00 0.00 5.19 0.38 5.97 5.97

2934 3.38 1.29 0.00 0.00 4.99 0.42 5.96 5.96

2935 2.79 1.86 0.00 0.00 5.45 0.00 6.27 6.27

2939 0.00 0.00 0.00 0.00 0.30 0.00 0.00 0.00

2941 0.02 0.00 0.00 0.00 5.49 0.41 0.04 0.04

2942 2.58 2.17 0.00 0.00 6.50 0.00 6.50 6.50

Korea on

China

Korea on

India

Australia

on China

Australia

on India

USA

on

China

USA

on

India

3003 8.00 0.01 0.00 0.00 0.00 0.00

65

3004 8.00 0.00 0.00 0.00 0.00 0.00

Mexico

on China

Mexico

on India

Australia

on china

Australia

on India

Japan

on

china

Japan

on

India

UK on

china

UK on

India

USA

on

China

USA

on

India

4003 0.00 0.00 5.00 5.00 0.00 0.00 0.00 0.00 0.00 0.00

4008 0.00 0.00 3.60 3.60 0.00 0.00 2.59 0.00 0.79 0.00

4010 0.00 0.00 5.00 5.00 0.00 0.00 6.50 2.20 3.79 0.65

4012 13.24 13.24 5.00 5.00 0.00 0.00 3.18 0.00 1.57 0.00

4013 7.24 7.24 3.77 3.77 0.00 0.00 4.00 0.00 1.41 0.00

4014 5.00 5.00 1.60 1.60 0.00 0.00 0.00 0.00 1.34 0.00

Myanmar

on China

Myanmar

on India

Singapore

on China

Singapore

on India

Belgiu

m on

China

Belgiu

m on

India

USA on

China

USA in

India

7102 0.00 19.42 0.00 0.00 0.00 0.00 0.00 0.00

7103 0.00 21.00 0.00 0.00 0.00 0.00 2.80 0.00

7104 0.00 7.51 0.00 0.00 0.00 0.00 3.13 0.59

7107 0.00 10.00 0.00 0.00 0.00 0.00 3.30 0.00

7108 0.00 12.00 0.00 0.00 0.00 0.00 1.99 0.00

7112 0.00 13.65 0.00 0.00 0.00 0.00 0.00 0.00

7113 0.00 30.00 0.00 0.00 2.51 0.00 6.39 3.11

7114 0.00 13.44 0.00 0.00 2.00 0.00 4.53 0.19

Korea on

China

Korea on

India

Philippine

s on

China

Philippine

s on India

Vietna

m on

China

Vietna

m on

India

Thailand

on China

Thailand

on India

7201 0.01 0.00 1.00 1.00 0.00 0.00 0.00 0.00

7202 2.36 0.46 1.00 1.00 0.00 2.33 0.00 0.00

7203 0.14 0.00 3.00 3.00 0.00 0.00 0.00 0.00

7207 0.00 0.00 1.95 1.95 4.22 4.82 0.00 0.00

7208 0.00 0.00 7.00 7.00 0.00 0.00 3.12 5.00

7209 0.00 0.00 6.46 6.46 5.76 5.96 5.00 4.41

7210 0.00 0.00 6.48 6.48 3.33 8.64 1.62 4.96

7215 0.00 0.00 7.00 7.00 2.95 4.85 0.00 0.00

7220 0.00 0.00 1.90 1.90 0.00 3.48 3.48 3.48

7221 0.00 0.00 1.00 1.00 0.00 0.00 0.00 0.00

7222 0.00 0.00 3.00 3.00 0.00 6.18 2.25 4.30

66

7223 0.00 0.00 1.00 1.00 0.00 8.00 5.00 5.00

Korea on

China

Korea on

India

Japan on

China

Japan on

India

Austral

ia on

China

Austral

ia on

India

Germany

on China

Germany

on India

USA

on

China

USA

on

India

7303 8.00 0.67 0.00 0.00 0.00 0.00 3.20 0.00 0.00 0.00

7305 0.00 0.00 0.00 0.00 4.00 4.00 0.00 0.00 0.00 0.00

7306 0.00 0.00 0.00 0.00 4.00 4.00 0.00 0.00 0.00 0.00

7307 6.88 0.00 0.00 0.00 4.00 4.00 3.49 0.00 3.21 0.57

7311 8.00 0.00 0.00 0.00 5.00 5.00 2.70 0.00 0.00 0.00

7325 5.84 0.00 0.00 0.00 4.58 4.58 2.18 0.00 0.50 0.00

7326 5.69 0.05 0.00 0.00 4.95 4.95 2.63 0.00 2.56 0.92

Korea on

China

Korea on

India

Malaysia

on China

Malaysia

on India

USA

on

china

USA

on

India

7401 0.00 0.00 0.00 0.00 0.00 0.00

7403 2.96 1.20 0.00 0.00 1.00 0.00

7405 5.00 0.00 0.00 0.00 0.00 0.00

7415 8.00 0.00 0.00 0.00 1.49 0.00

7418 7.84 0.00 0.00 0.85 3.00 0.00

7419 6.46 0.38 0.00 1.48 1.41 0.27

Netherlan

ds on

China

Netherlan

ds on

India

Belgium

on China

Belgium

on India

Korea

on

China

Korea

on

India

7502 0.00 0.00 0.00 0.00 3.00 0.00

Malaysia

on China

Malaysia

on India

Japan on

China

Japan on

India

Vietna

m on

China

Vietna

m on

India

USA on

China

USA in

India

7601 0.00 0.00 0.00 0.00 0.00 2.00 1.45 0.39

7603 0.00 0.00 2.40 0.00 0.00 0.00 4.78 0.00

7614 0.00 15.00 2.40 0.00 0.00 7.50 3.61 1.40

7616 0.00 14.39 2.40 0.00 0.00 10.00 0.96 0.00

Indonesia

on China

Indonesia

on India

Thailand

on China

Thailand

on India

Vietna

m on

China

Vietna

m on

India

7801 0.00 4.16 0.00 0.00 0.00 0.00

Indonesia Indonesia Malaysia Malaysia USA USA

67

on China on India on China on India on

China

on

India

7901 0.00 1.11 0.00 0.00 1.90 0.37

7904 0.00 5.75 0.00 0.00 4.20 0.00

Japan on

China

Japan on

India

Netherlan

ds on

China

Netherlan

ds on

India

Korea

on

China

Korea

on

India

8110 0.00 0.00 6.56 6.46 3.00 0.00

UK on

China

UK on

India

USA on

China

USA on

India

Japan

on

China

Japan

on

India

Netherlan

ds on

china

Netherlan

ds on

India

Germa

ny on

China

Germa

ny on

India

8204 1.70 0.00 9.00 0.00 0.00 0.00 1.70 0.00 1.70 0.00

Germany

on China

Germany

on India

Netherlan

ds on

China

Netherlan

ds on

India

Japan

on

China

Japan

on

India

USA on

China

USA on

India

8402 2.70 0.00 2.70 0.00 0.00 0.00 4.61 0.00

8405 1.70 0.00 1.70 0.00 0.00 0.00 0.00 0.00

8406 2.70 0.00 2.70 0.00 0.00 0.00 3.35 0.00

8410 4.50 0.00 4.50 0.00 0.00 0.00 3.80 0.00

8437 1.70 0.00 1.70 0.00 0.00 0.00 0.00 0.00

Japan on

China

Japan on

India

Korea on

China

Korea on

India

USA

on

china

USA

on

India

8514 0.00 0.00 6.11 0.00 0.72 0.00

8535 0.00 0.00 8.00 0.00 2.63 0.00

8545 0.00 0.00 4.15 0.00 0.00 0.00

8546 0.00 0.00 8.00 0.00 0.73 0.00

Japan on

China

Japan on

India

Vietnam

on China

Vietnam

on India

Mexico

on

China

Mexico

on

India

Iran on

China

Iran on

India

USA

on

China

USA

on

India

8701 0.00 0.00 0.21 5.21 14.65 14.65 11.76 11.76 0.97 0.97

8706 0.00 0.00 23.20 23.20 13.33 13.33 0.00 0.00 1.50 1.34

8710 0.00 0.00 0.00 0.00 5.00 5.00 4.00 4.00 0.00 0.00

8711 0.00 0.00 39.39 71.28 10.91 10.91 65.00 65.00 1.17 0.00

Germany

on China

Germany

on India

Laos on

China

Laos on

India

France

on

china

France

on

India

USA on

China

USA on

India

68

8802 1.41 1.41 0.00 10.00 1.41 1.41 0.00 0.00

8805 1.01 1.01 0.00 10.00 1.01 1.01 0.00 0.00

Singapore

on China

Singapore

on India

Bahamas

on China

Bahamas

on India

Malta

on

China

Malta

on

India

8904 0.00 0.00 10.00 10.00 0.57 0.57

8905 0.00 0.00 45.00 45.00 0.38 0.38

8906 0.00 0.00 28.52 28.52 0.59 0.59

Mexico

on China

Mexico

on India

Korea on

China

Korea on

India

Japan

on

China

Japan

on

India

USA on

China

USA in

India

9033 0.00 0.00 8.00 0.00 0.00 0.00 2.20 0.00

Brazil on

china

Brazil on

India

Sudan on

China

Sudan on

India

Germa

ny on

China

Germa

ny on

India

USA on

China

USA in

India

9305 20.00 20.00 40.00 40.00 1.14 1.14 0.80 0.10

9307 20.00 20.00 25.00 25.00 1.70 1.70 2.70 0.00

From the table, it is evident that Import duty imposed by various nations on goods exported by

India is always less than those exported by China except those goods and nations highlighted in

the table. Thus, these nations should import the goods from us if the duty on India is less. If the

duty is same on the other hand, it won’t make much difference whether they import the good

from us or China, but for the above goods India’s RCA is more than China’s, thus they must

import the good from us. For the cases where import duty on India is very high than on China eg:

for good 8711 there is a high difference between the duties imposed by Vietnam, it would be

costlier for the nation to import from us. In such cases further analysis of duty differential must

be taken into account.

69

7. NEWS INSIGHTS

7.1. Current Scenario

Easing factory-gate deflation is a vital sign of stabilization of the Chinese economy after

more than four years of falling producer prices. Producer prices fell 2.8% , the least since

2014, owing to the decline in excess capacity. Mining and raw materials producer prices

slumped less in May than in April’16. The prices of oil and iron ore fell less sharply than

in 2015.

The consumer prices index rose 2% from a year earlier, which may provide room to the

Central bank for adding further stimulus in the short run to increase the growth.

Vegetable prices dropped by 21.5% in May while pork and gas price rose. On y-o-y

basis, the gains in food prices slowed to 5.9% from 7.4% in the month of April. On the

other hand, non-food prices rose by 1.1% only. The domestic demand has stabilized and

the deflationary threat has diminished.

The high level of Chinese debt is mainly concentrated in the corporate and local

government sectors. It is being said that the situation of high debt is not as dangerous as it

seems to be. The main reason is the high savings rate of the economy (more than 45%

over the last decade), which enables China to sustain the high level of debt.

China’s banking system remains the primary channel for the transfer of household

savings to corporate investment. Equity financing accounts for only 5% of the net

investment and the underdevelopment of the capital market is also one of the reasons for

the growing debt.

China’s banking system had a loan-to-deposit ratio of 74% at the end of 2015, with

17.5% in the required reserves held at the central bank. The capital adequacy ratio was

13.2%. Also China has accumulated wealth in almost all sectors. Household deposits

accounted for 40.1% of total bank deposits at end of March’16 and the non-financial

corporations comprised 32.1%. The share of government’s deposits was 17.1%. It has

been estimated that the central and local governments have net assets amounting to 146%

of the GDP, mostly in real-estate.

70

According to the Chinese Government, the level of debt remains controllable and there is

further room for increasing debt. The central Government debt totaled $1.62 trillion.

Combining debts of central and local govt., they account for 39.4% of China’s GDP.

China tops the world in creating green jobs – Renewable energy(RE) job creation in the

world 8.1mn persons are employed in the clean energy space out of which 3.5mn are

employed in China.(According to the International Energy Agency’s Annual

Review,2016). Chinese oil and gas sector employed 2.6mn people. The key driver for

increasing the jobs is the enabling policy framework.

Real Estate sector is dominating the investment, making up 45% of the 2015 total. And,

Renewable Energy at 20% is another sector where Chinese investors are heavily

interested in followed by Healthcare at 17%; Mining at 9%; and infrastructure, energy

and agribusiness at 9%.This recent flow of Investment clearly reflects China’s focus on

middle class consumption-premium quality health, lifestyle and services.

7.2. China’s stance amid the slowdown

Since, China is the most followed economy followed by USA by the policy makers of

other economies; it needs to be more adept at Policy communication. In August, China’s

decision of devaluing Yuan can be traced as something confusing and not well

communicated raising fears about its analysis of its own economy that it still holds as a

strong nation. To address this situation, China’s National Bureau of statistics is likely to

set up its own think tank to help it better formulate policy and understand what is

happening in the country’s economy. This would help better meet the needs of

establishing a modern statistics system and analyzing what is going on in China’s “new

normal” economy.

To tackle the issue of excess capacity, China’s Premier Li Keqiang has urged State-

owned Enterprises (SOEs) to remove excess production capacity and increase quality

along with transfer of workers to other posts with financial and policy support from the

Central and local Governments, instead of being laid off.

The main priorities of China’s new 13th Five Year Plan include greater focus on

innovation and industrial upgrading, along with a shift in growth model from an export

71

led economy based on manufacturing to service based economy with more emphasis on

domestic consumption.

As a recent example, China’s booming cross- border e-commerce space is creating an

exciting new market for logistics providers to transport goods from foreign retailers to

Chinese consumers. According to Song Xujun, consulting director at professional

services firm Deloitte in China, there is a lot more room to grow logistics products and

services in the cross border space compared with China’s well established domestic

logistics market.

7.3. Chinese trade regime

Indian Government has imposed anti –dumping duty of $122.14-279.78 on Chinese

import of a chemical, used in pharmaceutical and fragrance sector to protect the domestic

manufacture.

Chinese riddle over production of aluminum, that has slumped down by 6.6 million tons

between December and February, and then expected to pick up by 5.2 million tons in

March and April has led to interrogation into both Chinese data and unfair trade practices

followed by the country. Relevance of Chinese industry in the sector is clear from the fact

that China alone accounts for 32 million tones of the 2015 world output of 58 million

tones. Analysts are wary of the situation when China would push its surplus metal in the

world market. Complaints regarding government subsidies, including low tariff

electricity, which is the biggest cost component in aluminum making and cash support,

have also received criticism.

US International Trade Commission (ITC) would investigate a complaint by Pittsburgh-

based US Steel Corp, which Chinese steelmakers and distributors conspire to fix prices,

stole trade secrets via computer hacking and misrepresented the origin of their exports to

the US, and want to bar nearly all imports from China’s largest steel maker. In response,

China has appealed to the World Trade Organization to safeguard the interests of its steel

producers.

China has lifted the import ban on bovine and ovine genetic material from EU countries,

Denmark, France, Germany, and United Kingdom. The ban was introduced on May

2012, referring to an alleged risk of Schmallenberg Virus (SBV) which can cause birth

72

defects and stillbirths in cattle, sheep, and goats. This restriction went beyond the

international standards set by the World Organization for Animal Health (OIE), which

considered that trade measures for this disease were not required.

China and Australia trade relations enhance with the China-Australia Free Trade

Agreement in place, however, Australian exporters are expected to reap huge benefits,

and the position of China’s exporters is not clear. Since, ChAFTA has come into effect;

there have been two rounds of tariff cuts on Australian exports to China. The agreement

removes barriers to trade in goods, services and investment; also strengthening

Australia’s cultural, social and political relationship with China.Major Australian exports

affected by the Agreement include Wine exports and Seafood products. With ChAFTA,

more than 86 percent of Australia’s goods exports to China will enter into duty free area.

And the percentage will rise to 93 percent after four years and 96 percent once the full

agreement is implemented.

7.4. Asia and China

Factory activity in Asia is slowing down. Thanks to the tepid export-driven businesses

and slowing global economy. The picture is thus muted both in terms of factory output

and exports. However, the growth is still robust – Asia has remained the fastest growing

region for the past five years with 6.5% growth rate.

As per the IMD World Competitiveness Scoreboard 2016, Asia’s competitiveness

declined since ranking of the major Asian economies fell from their 2015 positions.

China’s rank fell from 22 to 25. The decline in Asia has been due to the strong dollar,

falling global prices and deterioration of balance sheets in both private and public sector.

Though it was the third straight month of improvement for China, the output barely

improved in May’16 as compared to April. China’s official purchasing Managers’ Index

was 50.1 for the month of May, only fractionally above the value of 50. This implies

slowing down of new orders and export orders. Also, the private Markit Manufacturing

Purchasing Managers’ index (focusing on smaller companies) showed deteriorating

conditions for 15th straight month.

73

China’s growth rate of 6.7% for the first quarter has been its slowest since 2009. The

flagging global recovery and growth moderation in China are the causes of subdued

global commodity prices and constrained growth of commodity exports.

China’s growth deceleration may continue, it is hoped that it will be gradual. There has

been focus on innovation and industrial up gradation to boost productivity, to offset the

impact of declining working age population (among the priorities of China’s five year

plan 2016-20). There has been a shift from reliance on the manufacturing sector to the

services and domestic consumption.

As china gradually shifts from the low cost labor-intensive manufacturing industries and

as the demand for quality consumer goods by the middle class increases, it will beneficial

for both the growth of the Chinese economy and for the world as new opportunities will

be available to the other economies.

74

8. CONCLUSION

1) For enhancement of exports, an increase in production capacity that overrides the

consumption basket is essential, and requires a serious attention towards bridging of

institutional as well as infrastructural gaps. Institutional gaps may include clear

demarcation of authorities concerned, as well as increasing the potential capacity of

existing Mega Food Parks and Clusters along with setting up of new ones. In addition,

institutional support for outreach, knowledge sharing and provision of training kit to

medium and small traders and farmers can act as another boon. Whereas, infrastructural

gaps may focus on overcoming the supply-side bottlenecks of India, by mainly focusing

on road-connectivity, logistics, cold storage facilities etc.

2) China and India share a common feature, of having abundant labor supply, but the only

difference that exists is that India’s labor lacks the technical skills and practical

applicability of the knowledge gained. Hence, turning the direction of education towards

vocational perspective is the need of the hour. By this, India’s huge population

dependence on smaller land area can be turned into a profitable asset for the economy.

3) Addressing quantity only may not fetch us the desired results, as exports if not at par with

the desired quality may be rejected, leading to loss arising not on account of only that

particular transaction, but also a deterioration of reputation may further erode the

confidence and future supplies. Hence, a detailed analysis of quality issues needs to be

addressed giving them similar status of priority as that for quantum of exports. For this,

initial step involves identification of the reasons for such rejection, and segregating them

into political gimmicks or arising from the real quality controls lacked by Indian exports.

In the second step, stringent policy measure for checking and avoiding export of such

inferior quality consignments could solve the purpose.

75

ANNEXURE-I

Priority List 1

India, being a labor intensive country, has a huge potential in agricultural and allied activities

along with those industries where labor hours required per unit are huge, hence it could be a

major exporter in these, and escalate its production capacity to capture a wider market share.

PRODUCTS AT HS CODE -2 CHINA’S EXPORTS(Values,

in USD thousand)

INDIA’S EXPORTS(Values,

in USD thousand)

02-MEAT AND EDIBLE

MEAT OFFAL

1,057,537 4,342,028

09-COFFEE,TEA,MATE

AND SPICES

2,537,040 2,919,671

10-CEREALS 322,024 6,846,427

15-ANIMALS,VEGETABLE

FATS AND OILS,CLEVAGE

PRODUCTS ETC.

666,628 929,771

30-PHARMACEUTICAL

PRODUCTS

6,942,904 12,544,722

As can be seen from the above table, Indian exports fare better than China’s exports. Hence, an

escalation in these sectors would generate greater revenue in these sectors along with increase in

employment and labor force participation as many sub-sectors within these doesn’t requires high

skills.

Priority List 2

PRODUCTS AT HS CODE-2 CHINA’S EXPORTS(Values,

in USD thousand)


in USD thousand)

29-ORGANIC CHEMICALS 42,683,948 11,298,856

39-PLASTICS AND

ARTICLES THEREOF 65,835,653 5,012,759

40-RUBBER, AND 20,358,587 2,361,582

76

PRODUCTS AT HS CODE-2 CHINA’S EXPORTS(Values,

in USD thousand)


in USD thousand)

ARTICLES, THEREOF

48-PAPER AND PAPER

CARDS, ARTICLES OF

PULP, PAPER AND BOARD

18,849,402 1,127,620

72-IRON AND STEEL 49,223,944 6,308,179

84-MACHINERY,

NUCLEAR REACTORS,

BOILERS, ETC.

364,536,627 13,231,404

85-ELECTRICAL,

ELECTRONIC

EQUIPMENTS

600,292,287 7,935,913

87-VEHICLES,OTHER

THAN RAILWAYS,

TRAMWAYS

62,651,637 14,081,904

88-

AIRCRAFT,SPACECRAFT

AND PARTS THEREOF

3,483,943 3,784,100

As can be accessed from the market speculations, Chinese economy is on the downturn, and

hence would face a downward trend in its production process, thus the decrease in quantum of

exports by China could be taken over by India, to provide the world with the same or rather an

increase in volume of exports. Output in China, the world’s second largest economy, barely

improved from a month earlier. China’s official Purchasing Managers Index (PMI) was only

fractionally above 50.1 in May. Although, the present state indicates that India lags hugely

behind China, but the gap between China’s exports and India’s exports can be narrowed down

with a move towards increasing investments in these sectors along with government’s support

through schemes, such as, Make in India, Digital India and Startup India. In addition, major

reforms such as GST and Bankruptcy Laws can further facilitate the process.

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