Sourced fact
The News
The gaming sector in India has shown rare success in reducing dependence on China, reflecting India's difficulty in improving its economic relations with its neighbor. According to a report by the British news agency BBC, import tariffs on games from China increased from 20% to 70% in India, leading to a decline in Chinese imports from 70% to less than 10% of the local gaming market. Indian gaming exports also rose from approximately $129 million to $200 million during the same period.
Despite this, the gaming sector remains a rare exception in India's efforts to adjust its trade relationship with China, as the trade deficit between the two countries continues to grow. According to Kevin Zongze Li, a fellow at the Asia Society Policy Institute, the trade deficit between India and China reached $112 billion this year, compared to $44 billion in 2020.
India faces difficulties in reducing its dependence on China in sectors such as electronics and chemical industries, where India relies on China for the production of over 100 critical products. Ajay Srivastava, director of the Centre for Trade and Research in India, notes that India depends on China for producing essential components for its domestic industries. Srivastava added that "disruption of Chinese supplies would have a significant impact on production in India."
Analyses suggest that India needs specific industrial policies to boost local manufacturing and improve industrial infrastructure, including better financing and logistics. Li also suggests that India should aim to increase its exports to China in specific sectors such as pharmaceuticals, but adds that this would not be sufficient to reduce the large trade deficit.
Analysis & context
Analysis & Context
Analytically, the economic relationship between India and China is one of the most influential in Asia. Although India has succeeded in reducing its dependence on China in the gaming sector, it still faces a significant trade deficit in other areas. This reflects India's challenges in promoting local industry and replacing Chinese imports.
In a broader context, India faces major challenges in reducing its reliance on China in sectors such as electronics, industrial machinery, and chemicals. This underscores the need for strong industrial policies and robust infrastructure to support domestic industry.
Lastly, India faces difficulties in accessing the Chinese market due to tariff and non-tariff barriers, making it challenging to increase Indian exports to China. This points to the need for reciprocal negotiations on market access as part of the process of normalization between the two countries.
