Indo-China trade relations:present trends and future prospects

India and China started opening up in the International market very late. They were in-ward looking economies in the beginning. But when they realized the importance of trade, they also opened up. The nature of both the economies changed from an in-ward looking economies to an out-ward looking and a lot of trade took place between the two nations. Constant Market Share Analysis has been used to find out the result from the trade data. It has been proved empirically that bilateral trade has given advantage to both the nations and still there is a lot of potential in both the countries to increase their bilateral trade. There are few commodities which are produced in India just to be exported to China and there are some products in China also which are produced to be sold in India only. So they have specific demand and supply relation for each other. The most important observation made in the paper is that, the trade between India and China is not of the nature that it is increasing because the world trade is increasing; instead, there are some commodities which are being traded by India and China for each other only because they are demanded in each other’s country. And the volume of trade of those commodities is increasing because the demand for them is increasing in the other country, not because of the increase in the world trade volume. If those commodities are not traded with each other, they will find it difficult to sell it anywhere else in the international market.