Impact of imports from China on Indian manufacturing performance: an analysis of trade competitiveness

What is it about?

The focus of this paper is to provide an assessment of the impact of imports from China on Indian manufacturing and capture the multifarious dimensions of India-China bilateral trade flows. By analysing manufacturing imports from China with RCA<1, this paper analyses factors beyond trade competitiveness not covered by RCA methodology. The impact of imports from China on manufacturing output is positive and significant. A one per cent increase in the import share from China will increase the industry output by 0.31%. A comparative analysis of industry performance between India and China shows that the positive impact of imports on industry output is due to lack of domestic capability for critical inputs. As such, imports from China complement domestic production. From this perspective, it is argued that providing easy access to imports of Capital and Intermediate goods and redefining FDI for effective technology transfer is necessary for propelling Indian manufacture to a higher technology frontier..

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