Channel: Trade

Friday, October 08, 2010
India lags behind China in goods trade with the UK
In the last issue we analyzed India’s service trade with UK vis-à-vis BRIC nations and goods trade is next in the sequence.
Tables & Graphs
 
 

In the last issue we analyzed India’s service trade with UK vis-à-vis BRIC nations and goods trade is next in the sequence. The most noteworthy difference between Goods and service trade is Chinese dominance of goods trade with UK vis-à-vis other BRIC nations unlike service trade. Looking at China’s manufacturing capabilities, it is not very surprising but the most stunning is the growth rate and resilience it has shown in the recent years. India trails far behind China and remains a distant second in the league. Big question is can India match Chinese magic figures despite its best efforts?

 

Figures show that UK goods exports to BRIC have grown from GBP 5b to GBP 15b from 2000 to 2008.However this value registered around 20% fall in 2009 due to global slowdown.UK exports to BRIC reveal many startling facts. India, which led the tally with GBP 2b in 2000, is now a distant second with China becoming largest export destination in BRIC for UK. Table also reveals that UK goods export to India is very vulnerable with exports witnessing negative growth on 5 occasions in last 10 years. The global slowdown has clearly given the trends of UK exports to BRIC countries. While China imported more even in 2009, Russian and Indian goods import from UK fell down drastically. During the boom time general impression was that India and Russia are quickly catching up with China in goods import from UK but the outburst of recession has demystified that myth. India being pushed to 3rd position as UK goods export partner in BRIC, clearly marks a need for policy push to bridge the gap with China.

 

UK import from BRIC clearly establishes the fact that China rules the manufacturing world in BRIC. UK imports around GBP 34b from BRIC and almost 2/3 comes from China alone. Though the Chinese supremacy is not new, but most stunning is the way goods export from China to UK have grown. It has become five fold in just 10 years. Brazil has completely missed the bus but even India and Russia have not been able to come close to China. Indian exports to UK have shown negative growth in 2002 & 2009 both being the result of a global factor. Though India has been able to ensure a very minimal negative change in goods export to UK, it is far behind China in this regard.

 

UK goods trade with BRIC has become more than 3 times in last 10 years. The trade with China has grown to more than 4 times, while India has been able to double the trade. Current volume of India-UK goods trade is around 25% of China-UK goods trade. It very clearly implies that the both the countries have not been able to unleash the true potential of bilateral trade.

 

From the table it is clear that UK is a net importer of goods from BRIC. China maintains a huge surplus with UK, while the rest three have a moderate trade surplus. During the economic boom period reflecting in 2008, India’s goods trade surplus with UK touched lowest among the BRIC. It is a clear sign that UK exports to India are undervalued and have not clocked their actual potential. The Chinese dominance can be easily gauged by the fact that cumulative trade surplus of other 3 BRIC countries including India is almost 25% of Chinese goods trade surplus with UK.

 

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