China back as top India trade partner amid escalating indo-china relations

China reclaimed its position as India's top trade partner in 2020, as New Delhi's reliance on imported machines outweighed its efforts to curb commerce with Beijing after a bloody border conflict.

Trade between the longstanding, economic and strategic rivals stood at $77.7 billion in 2020, according to provisional data from India's commerce ministry. However, that was lower than the previous year's $85.5 billion total, it was enough to make China the largest commercial partner displacing the U.S. bilateral trade with whom came in at $75.9 billion amid muted demand for goods in the middle of a pandemic.

Earlier, Prime Minister Narendra Modi banned hundreds of Chinese apps, slowed approvals for investments from the neighbor and called for self-reliance after a deadly clash along Himalayan border. As a result, the bilateral trade gap with China was at almost $40 billion in 2020, making it India's largest.

Total imports from China at $58.7 billion were more than India's combined purchases from the U.S. and the U.A.E, which are its second- and third-largest trade partners, respectively. Heavy machinery imports accounted for 51% of India's purchases from its neighbor.

That said, India did manage to lower imports from its Asian neighbor amid demand disruptions caused by the coronavirus pandemic. India also managed to increase its exports to China by about 11% from a year ago to $19 billion last year, which makes any further worsening of ties with Beijing a threat to New Delhi's export revenue.