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The United Arab Emirates (UAE) will emerge as India’s largest trading partner by 2025, according to an online report.

Indian merchandise trade in 2025 is expected to be USD6.7 billion, almost three times its levels in 2010 — at $338.9 billion.

China is India’s largest trading partner and accounted for a share of 9.09% in India’s international trade during 2009-10. But the trade is heavily in favour of China. China is the top source of India’s imports and accounts for 10.69% in India’s total imports. As for exports, it was the third highest destination behind the UAE and the US and accounted for 6.5% of the country’s total exports.

Bilateral trade between India and China exceeded the two countries’ $60 billion target last year, driven largely by rising Indian imports of Chinese machinery that have left a record trade imbalance of $20 billion in China’s favour.

Figures released for last year showed that bilateral trade in 2010 reached $61.7 billion, with Chinese imports to India touching $40.8 billion.

“The report also confirms the shift in India’s trade patterns that we have been witnessing. Trade with the West Asia corridor, China and a few Latin American countries is expected to be higher than India’s traditional large trading partners the US and Europe,” said Bhriguraj Singh head, trade and supply chain at HSBC India.

In the trade confidence index, India’s traders have revealed that they see the Middle East, China and the US as their prospects for trade growth in the next six months. India’s key trade corridor is with the UAE across a number of sectors. Export growth will be fastest in manufacturing, iron and steel at 8.6% and 8.5% annualised across the period.

Imports from the UAE in petroleum products will increase by 200% (annualised at 8.1 %) by 2025. The trade corridor emerging with China is focused on mechanical engineering where exports to the country will grow at 9.35% while imports from China will increase at an annual rate of 9.7% said the survey.

The HSBC trade forecast said India’s share in world trade would increase to 2% in 2025 from 1.2% in 2010. India’s trade volumes will grow by 156% in 2025 with the country emerging as a powerhouse in high value engineering and chemicals based trade, linking the Middle Eastern and Asian markets.

The speed of India’s economic development over the last 10 years has been fuelled by trade, not just in commodities but also high value engineering, pharmaceuticals and chemicals.

Although there continues to be weaknesses in the world economy, India’s trade will increase by around 12.27 % with most growth coming in the next five years. Annualised gro­wth will be above 10% in the next 5 years fuelled by strong export performance.

Volatility in foreign exchange rates, fluctuating interest rates and inflation were cited as the major barriers for trade growth by companies.



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