Go to a toy store in India. While buying a favorite toy for your child there, you can also understand how India is struggling to balance its economic relations with its powerful neighbor China.
Six years ago, India had increased the import duty on toys coming from abroad. Its objective was to increase the production of toys in the country and to keep poor quality foreign toys out of the Indian market.
At that time, there was a 20 percent duty on imported toys. It was first increased to 60 percent and then to 70 percent.
Shopkeepers and toy selling companies strongly opposed this. He said that Indian companies would never be able to compete with toys made abroad.
But increasing the import duty and tightening the rules related to quality had an impact.
China once had 70% share in the Indian toy market.
Import of toys in India declined by one-third from around $300 million in 2020 to $100 million this year.
During the same period, export of toys from India increased from about $129 million to $200 million.
India was also successful in reducing its dependence on China in the matter of toys. At one time China's share in India's toy market was 70 percent.
However, the toy industry is one of the few sectors where India has achieved such success.
India's other efforts to balance its increasingly one-sided trade relationship with China have not been very successful.
Some experts say that this trade imbalance between India and China is now among the largest trade imbalances in the world.
After the clashes in Galwan Valley in the year 2020, diplomatic relations between the two countries had deteriorated badly.
After this, Delhi imposed anti-dumping duty on many goods coming from China. This means that additional duties were imposed on cheap foreign goods that threatened to harm India's own industries.
India also banned many Chinese apps like TikTok.
But despite these steps, India's trade deficit with China continued to increase.
In the year 2020 this loss was 44 billion dollars. This year it increased to a shocking level of $112 billion.
Kevin Zongzhe Li, of the Center for China Analysis at the Asia Society Policy Institute in Washington, told the BBC: "At a time when India and China's political, security and investment relations were at their lowest, India's economic dependence on China continued to increase."
What is even more worrying is that India's exports to China during this period remained below the pre-pandemic level. On the other hand, imports from China doubled.
Ajay Srivastava of Delhi-based Global Trade and Research Initiative (GTRI) says, "China's share in the goods India imports for industries is now more than 30 percent. India is dependent on China for more than 100 important products and this imbalance is continuously increasing."
According to Srivastava, if imports continue to grow at this fast pace, the trade deficit between the two countries could reach $134 billion.
If this happens, China's power to put pressure on Indian industries will increase further.
Prime Minister Narendra Modi and Chinese President Xi Jinping had talked about this issue during the BRICS conference held in Delhi in September.
Relations between the two countries are gradually improving. Meanwhile, both the leaders promised to remove the “fundamental imbalances and supply chain related problems” in trade.
But experts told BBC that Indian industries have become so dependent on Chinese goods that it will be very difficult for Delhi to change this situation.
The biggest reason for this is that India is no longer dependent on China only for purchasing finished goods.
Even to make goods in India, parts, machines and raw materials coming from China are required.
It is true that India has reduced its dependence on imports of finished devices related to smartphones and solar energy.
Now more than one-fourth of the world's iPhones are made in India.
But Ajay Srivastava says, "Despite this, large-scale production in India still means assembling parts from outside. For these parts, India is heavily dependent on imports, especially from China."
Same is the case with industrial machines, materials used in making batteries, chemicals, solar cells and equipment used in factories.
According to the think tank Observer Research Foundation or ORF, the share of electrical machines and electronic products alone in the goods coming from China to India is 36 percent.
After this, the share of machines and other mechanical equipment is 21.7 percent.
The share of organic chemicals and plastics is also quite large.
Saumya Bhowmik, associated with ORF's Center for New Economic Diplomacy, says that if the supply of these things stops, it will not only affect the goods used by people, but production in factories can also stop.
According to him, this shows how difficult it is for India to use indigenously made products instead of parts and raw materials coming from China.
India's imports from China are not increasing only because of the increasing need for components and raw materials. There are some big changes taking place in the economy behind this.
China has the capacity to produce more goods than it needs in many sectors such as steel, solar panels and electric vehicles.
But the pace of China's economy is slowing down. Its domestic market is not able to absorb this entire production.
Therefore, Chinese companies are now turning more towards the markets of other countries and selling goods there at lower prices.
It is estimated that China's trade surplus will be more than one trillion dollars for the second consecutive year. Trade surplus means that a country sells more goods to other countries than it buys.
Ajay Srivastava says that a lot of these goods are coming to India.
One reason for this is that India is rapidly increasing production in many sectors of its economy. For this he needs machines, parts and raw materials.
The second reason is that western countries are imposing duties and other restrictions on goods coming from China.
On the other hand, it is still a big challenge for Indian companies to make their place in the Chinese market.
India lags behind China in many matters
Kevin Lee says, "Indian products have to face many types of tariffs and other barriers in China. Because of this, it becomes difficult for Indian companies to increase their exports there on a large scale."
He says, "If relations between the two countries continue to normalize, but serious efforts are not made to give India equal access to the Chinese market, then political relations may improve, but India's economic dependence on China will remain the same as before."
According to Ajay Srivastava, the long-term way to reduce avoidable imports and increase exports is to strengthen production in India.
But for this, different policies will have to be made according to the needs of each industry. Along with this, the basic facilities of the economy will also have to be improved.
These include cheap electricity, low-cost loans, better transportation of goods from one place to another and rules that do not change frequently.
Srivastava says that India is still behind in these matters.
India has also recently relaxed some rules related to foreign direct investment (FDI).
This may open the way for Chinese companies wishing to increase their investment in India.
He says, "If any investment only increases the network of selling goods or products are manufactured in India by assembling parts from China, then this may further increase imports. India's dependence on China may also increase."
The pharmaceutical industry could be one such sector as the elderly population and expenditure on health services are increasing in China.
But he says, "The $112 billion trade deficit cannot be reduced by exploring export opportunities in only a few selected sectors."
According to him, the biggest question is whether China is ready to give India more access to its market amid efforts to normalize relations between the two countries and whether it will give some concession in this matter.
If China does not do this, then India will have to find its own way to put pressure on talks on this issue.
