Q. India’s import form China has increased in recent years. In this context, consider the following statements:
1.Higher tariff on Indian products from China.
2.Lack of attractive markets in China for Indian goods.
3.Cost competitiveness of Chinese goods over Indian goods.
Which of the above is/are the reasons(s) behind the increasing trade deficit with China?

[A] 1 and 2 only

[B] 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: C

Explanation – India’s import from China has increased but export with China is very low due to – the higher import duty imposed on Indian products which makes it difficult for Indian goods to get into Chinese market, Chinese goods have cost competitiveness over India goods and it also produces a very wide range of goods. Statement 2 is incorrect as China has attractive market for India goods but high duty and cost do not allow Indian products to land in the Chinese markets.

Source: ForumIAS