India has had a trade deficit with China for long. The reason is fairly simple to understand. China is an export powerhouse. Also, since its currency is pegged and kept artificially low, Chinese goods get competitive advantage across the world. However, during the recent visit of Chinese premier to India, both the countries decided to take steps to reduce this deficit. But it seems that this is unlikely to happen. The reason being India's exports to China majorly comprise of iron ore and iron sand. And considering the slowdown in the Chinese real estate market the demand for these Indian raw materials has declined. As a result, India's exports to China have declined. On the other hand, Chinese exports have been on an increasing trend. During the first four months of this year, Chinese exports increased 3.6% YoY. This has resulted in widening of the deficit. Considering that China's export basket is wide and India is dependent on Chinese products, the only way to reduce the deficit for India is to try and increase its exports to China. And this can be done by manufacturing goods that meet Chinese demand.