India’s Dependence on Chinese Imports for MSME Goods Declining

India’s reliance on imports of Micro, Small, and Medium Enterprises (MSME) goods, such as leather articles, toys, and musical instruments from China, has been steadily declining, signaling the country’s ongoing efforts to diversify import sources and strengthen domestic production capabilities, according to an official statement on Monday.

In contrast, other countries like Brazil are seeing an increase in their dependence on imports of similar goods from China. Citing data, the official noted that India’s concentration of musical instrument imports from China has dropped from 77.58% in 2013 to 51.51% in 2023. Similarly, the import share of essential oils, cosmetics, and toilet preparations from China has decreased from 16.33% in 2013 to 11.86% in 2023.

Imports of toys and games from China have also reduced, dipping from 76.7% in 2013 to 70.97% in 2023. This trend reflects a broader strategic shift by India, where the country is reducing its reliance on Chinese imports in categories such as leather goods, ceramics, toys, and musical instruments, while other major markets continue to rely heavily on China for these goods.

“This indicates a strategic move by India to diversify its import sources and boost domestic production capabilities,” the official said.

A report by the Global Trade Research Initiative (GTRI), published on September 1, highlighted concerns about increasing imports of items such as umbrellas, toys, certain fabrics, and musical instruments, which are impacting MSMEs in India. Many of these products are also manufactured domestically, and rising imports have posed challenges to local businesses.

The GTRI report further revealed that China supplies 95.8% of India’s umbrellas and sun umbrellas, worth $31 million, and 91.9% of artificial flowers and human hair articles, valued at $14 million. These imports are creating additional pressure on Indian MSMEs, many of which produce similar goods.

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