The Government has admitted that steps taken to reduce ballooning trade deficit with China, which has touched about $40 billion, have not succeeded.

“Steps taken to restrict negative balance of trade with China have not succeeded as per the expectations,” Minister of State for Commerce and Industry Jyotiraditya Scindia has said in a written reply to the Rajya Sabha.

“This can partly be attributed to the economic structure of the two countries, basket of goods traded between the two, market access issues in China and the global economic recession which has led to a general decline in overall trade volumes,” he added.

Scindia said the composition of trade between the two is very skewed.

Trade deficit has increased in favour of China to $39.65 billion in 2011-12, from $9.15 billion in 2006-07.

“While India exports primary products, raw material mainly iron ore, copper, minerals, cotton, the imports from China are mainly of finished goods and machinery,” he added.

In 2011-12, non-ferrous metals, iron ore and cotton constituted over 53 per cent of Indian export to China whereas about half of the total share of the imports from China is constituted by electrical machinery and machinery, reactors and boilers, Scindia said.

“Besides, India’s under-investment in manufacturing and value added industry has created a market for the import of Chinese manufactured and value added products in India. India’s expansion of telecom network and power industry has resulted in greater Chinese imports in these sectors,” he said.

Both the sides have targeted $100 billion bilateral trade by 2015 from $75.45 billion in 2011-12.

The Minister said India is making efforts to bridge the widening trade deficit with China by diversifying its trade basket with emphasis on manufactured goods.

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