India-China bilateral trade, which flourished till last year, is facing a downturn in 2012 with overall trade declining to $55.6 billion in the first ten months, while trade deficit for India has ballooned to $23 billion.
According to official figures released here, Indian exports to China totalled to $16.3 billion registering 13.3 per cent decline.
The decline was largely due to fall of Indian iron ore exports, which constituted about 50 per cent of India's exports, Trade Consular of the Indian Embassy here K Nagraj Naidu told PTI.
The overall trade figure of $55.6 billion between the Asian nations is a drop of 8.1 per cent year-on-year.
A cursory look at the preliminary trade data shows that exports of different products from India have not been much affected but the main slump is caused by the decline in iron ore exports which was more due to various domestic reasons like restrictions on mining, Mr Naidu said.
Also, exports were partly hit by depreciation of the rupee, which is discouraging the Indian exporter to aggressively market their products in Chinese markets as returns are poor, he said.
Besides, steel consumption in China, till recently regarded as the world's factory for its massive export potential, has come down due to fall in its global markets especially, the EU and the US.
Many Chinese steel factories including the country's biggest factory -- the Bao Steel in Shanghai -- have been closed as a result.
Naidu said the declining trend in iron ore exports should provide an opportunity to rebalance India’s trade to China from primary goods to products like IT, pharmaceuticals and agricultural goods which have been identified as products with great demand.
India has been conducting various campaigns in association with the Chinese Commerce Ministry to popularise these products here.
Significantly, China's exports to India also registered a downturn. According to the figures, China's exports totaled $39.3 billion in the last ten months registering a decline of 5.7 per cent.
The decline in bilateral trade is disquieting because the top leadership of both the countries fixed $100 billion trade target for 2015 to strengthen the relations between the two Asian giants.
Until last year, it looked possible as the bilateral trade touched a high point of $73.90 billion.
The declining trend has figured prominently in the meeting of the Commerce Ministers held in New Delhi when they met for the ninth round of India-China Joint Economic Group, (JEG), which according to Indian officials finalised a number of initiatives to be unfolded after the leadership change in China.
The ruling Communist Party of China, (CPC) is currently holding its once-in-a-decade leadership change meeting to select a new set of leaders.
A number of initiatives were also expected to be worked during the India-China Strategic Economic Dialogue to be held in New Delhi on November 26 to boost mutual investments.
Officials here say that China's investment in India so far totaled over $660 million while projects undertaken by Chinese firms in India were valued at about $55 billion. Several Indian firms have also invested in China.
Recently, top Indian Auto component manufacturers took part in the three-day China International Auto Parts Expo in a big way. More than 80 Indian companies took part at the "India show" organised at the Expo.
Also, a 19-member CEO and Business delegation led by S Gopalakrishnan, President Designate CII and Executive Co-Chairman Infosys Technologies Ltd and Rajive Kaul, Past President, CII and Chairman, NICCO Corporation Ltd took part in the event.