India’s trade deficit with China is estimated to have narrowed to $48.7 billion during the last financial year — the lowest in five years — compared with $53.6 billion a year ago, as imports from across the border dropped over 7% to $65 billion in 2019-20.

Last year’s trade deficit was roughly the same as the level seen in 2014-15, when the Narendra Modi administration first took office, but 34% higher than 2013-14, prompting the government to suggest that the steps taken by it in recent months have yielded results.


“It is not as if we are taking steps to reduce imports and reduce the trade gap now. We have been working on strategies for the past several months and going forward the results will be better,” said a source.

Commerce department officials said that the move to opt out of Regional Comprehensive Economic Partnership (RECEP) agreement, the proposed mega free trade agreement, will help it bridge the deficit with other steps such as faster trade remedies against subsidised or dumped goods too coming to the rescue of Indian industry.

The fall in imports from China also helped the US extend its lead as India’s largest trading partner. Against trade of $88.8 billion with the US, India’s trade with China was pegged at just under $82 billion.