INDIA-CHINA BILATERAL TRADE RELATIONSHIP: AN ANALYSIS OF ECONOMIC INTERDEPENDENCE AND STRATEGIC CHALLENGES

Abstract

This paper examines the trends and the product mix of trade between India andChina in both the global and bilateral markets. By using the Balassa RCA index, we identify a substantial expansion in products that exhibit a comparative advantage in India's and China's export portfolios. The analysis covers trade trends and the primary assortment of commodities exchanged between India and China from 2001 to 2021. To examine the bilateral trade between these two nations, metrics such as the Annual Growth Rate (AGR), Combined Annual Growth Rate (CAGR) and Revealed Comparative Advantage (RCA) have been employed. This analysis highlights the significant potential for trade in manufacturing, chemicals, and agricultural products. India's trade composition reveals a predominant emphasis on exporting primary products and importing manufactured goods. India's trade balance is currently unfavorable, necessitating immediate actions to boost exports to China, particularly emphasizing manufactured goods, as this sector holds significant potential.