India-China trade data for 2023 reveals a widening discrepancy, with India's reported imports from China falling significantly short of China's export figures, raising concerns over potential anomalies such as under-invoicing, misclassification, and inconsistent reporting practices.
In 2023, India's merchandise imports from China stood at $99.59 billion, which was 18.2% lower than the $117.68 billion worth of exports reported by China, according to the latest data from the World Bank's World Integrated Trade Solution (WITS) and the Directorate General of Commercial Intelligence & Statistics (DGCI&S).
The discrepancy stood at 15.5% the previous year, with India's merchandise imports from China valued at $102.63 billion, significantly lower than the $118.50 billion exports reported by China, according to the same data sources. China was India’s largest trading partner in 2023-24, per Indian government data.
The magnitude of these discrepancies indicates major anomalies, warranting closer scrutiny of the data reporting mechanisms.
“While discrepancies in trade data can arise due to methodological differences, the magnitude of these gaps—particularly in textiles and clothing, iron and steel, electronics, and remaining categories—requires deeper investigation,” said Ajay Srivastava, former trade service official and the founder of economic think tank Global Trade Research Initiative (GTRI).
“Addressing under-invoicing, misclassification, and data reporting practices is essential to ensure accurate trade accounting and mitigate revenue losses. Focused studies should prioritize sectors with the highest variance to identify and rectify anomalies,” he added.
Spokespersons of the ministry of commerce and the Chinese embassy in New Delhi didn't respond to emailed queries.
The divergence in India-China trade data is starkly evident in imports of shipping goods, aircraft, textiles and clothing, iron ore, steel, base metals, medical devices, leather, paper, and glass.
On the other hand, sectors such as chemicals and pharmaceuticals, diamonds, gold, and other valuable products, telecom, electronics, electrical products, and machinery and computers exhibited the opposite trend, with India’s reported imports exceeding China's export data.
Mint first reported in November 2022 about varying trade data from India and China, with the significant gap due to reasons which included under-invoicing of shipments by Indian importers to avoid paying import taxes.
Under-invoicing of imports involves marking the stated value of imports below the actual value paid to the exporter abroad, reducing the import tax outgo.
Experts said while India’s import values from China, reported by the DGCI&S, are calculated on a CIF (cost, insurance and freight) basis, these values are expected to be higher than China’s reported exports to India, measured in FOB (free on board) terms.
However, data from 2023 and 2022 reveal the opposite trend.
FOB origin typically means that the buyer assumes all risk once the seller ships the product.
“Normally, a country’s exports are reported in FOB terms while imports are reported in CIF terms. Since CIF includes FOB plus freight and insurance values, CIF values are usually 3-10% higher than the reported FOB values for the same consignments,” said Srivastava of GTRI.
"India’s import from China values as reported by DGCI&S are in CIF terms and hence should be higher than the values reported for the same trade by China as export values that are expressed in FOB," he added.
A senior trade economist, who also spoke on condition of anonymity, said that while the India-China trade discrepancy is established, it would be incorrect to attribute them solely to under-invoicing or misclassification, as there could be other reasons like quality issues with data or human errors which could be leading to the discrepancy.
In 2023-24, India’s bilateral trade with China reached $118.4 billion, cementing China as India’s largest trading partner during the year—making the data discrepancies a worrying factor.
India’s exports to China grew by 8.7%, totalling $16.67 billion while imports rose by 3.24%, amounting to $101.7 billion during this period. Meanwhile, India's goods trade deficit with China widened to $57.83 billion in April-October, from $51.12 billion in the same period a year ago, according to data from India's ministry of commerce and industry.
In October, the trade deficit with China widened to $8.46 billion from $8.27 billion a year ago.
