The border conflict between India and China failed to dent bilateral trade so far, with New Delhi having witnessed an impressive 23.7% year-on-year surge in exports to the neighbour to $1.74 billion in July. On 15 June, the deadly clash took place for 6 hours in Galwan.

In contrast, in July, overall merchandise of India waned by 9.9%, which reflects the damage caused by the COVID-19 pandemic.

As per the latest data sourced from the directorate general of commercial intelligence, world’s second-largest import economy dropped by only 9.8% year on year in July to $5.58 billion, compared with a much steeper 29.6% contraction in India’s total goods imports during the month.

Thus, between April and July, shipments of India to China mounted by 30.7% year on year, even though its overall exports contracted by as much as 30%.

In the first four months of the fiscal, India’s imports of the Chinese goods shrank by 29.2%, while its overall merchandise imports contracted by a massive 47.9%. In fact, except April, exports from India to China grew every month this fiscal.

Although any spike in squabble could eventually scatter over to trade, the relatively unhindered flow of goods so far reflects the intricate interdependence in the trade that both the sides are finding it arduous to shake off easily than in some other areas. Already, to expend a cost on Beijing for its border catastrophe, New Delhi has forbidden well over 200 Chinese apps, including TikTok and WeChat.

This step will likely seal the doors on Huawei and ZTE Corp for 5G networks and pats curbs on Chinese companies for participating in its public procurement programmes. Chinese companies may also find it more difficult to grip some critical infrastructure projects in India, especially in the road and power sectors.

Trade sources state exports to the neighbour raised because it is least affected by the Covid-19 pandemic among major nations and has a good appetite for commodities. Also, most probably China has not applied its usual trick of utilizing various non-tariff barriers to discourage supplies from India in times of frosty political ties. Still, the impulse in bilateral trade faces vital risks from any further escalation in border conflicts, they fear. Already, the EU and the US — India’s top two export markets – have reeled under the pandemic and demand from these destinations remains subdued.

Curiously, iron and steel remained the biggest segment of exports to China. Such exports jumped to $1,535 million in the April-July period from just $138 million a year before. Iron ore exports soared by almost 82%, year on year, to $1,344 million in the first four months of FY21, while plastics supplies grew 93% to $577 million and copper by 789% to $245 million. India usually imports these products in large volumes from China. However, organic chemicals supplies to the neighbour dropped over 9% to $965 million between April and July.