India’s trade deficit with China has reached an all-time high of USD 99.2 billion in the fiscal year 2024–25, reflecting deepening structural imbalances and growing concerns over economic dependence. Despite a rise in exports, the surge in imports from China continues to outpace gains, widening the gap significantly.
During April–July 2025–26, India’s exports to China rose by nearly 20% to USD 5.75 billion. However, imports from China increased by over 13% to USD 40.65 billion in the same period. For the full fiscal year 2024–25, India exported USD 14.25 billion worth of goods to China, while imports stood at USD 113.5 billion.
China now accounts for more than one-third of India’s total trade deficit, which stood at USD 283 billion last year. The deficit with China alone rose from USD 85.1 billion in 2023–24 to USD 99.2 billion in 2024–25.
The imbalance is driven by China’s dominance in key industrial sectors. India relies heavily on Chinese imports for pharmaceuticals, electronics, renewable energy components, and consumer goods. For example, over 97% of erythromycin imports, 96% of silicon wafers, and 82% of solar cells come from China. This dependence has raised strategic concerns, especially in light of geopolitical tensions.
India’s share in bilateral trade has declined from 42.3% two decades ago to just 11.2% today. Experts attribute this to limited market access for Indian exporters and the competitive pricing of Chinese goods.
In response, the Indian government has launched several initiatives to reduce import dependence. These include production-linked incentive (PLI) schemes across 14 sectors, stricter quality control measures, and efforts to diversify supply chains. The Ministry of Commerce clarified that most imports from China are raw materials and capital goods used in export-oriented manufacturing.
Prime Minister Narendra Modi recently emphasized the importance of stabilizing the global economic order and expressed India’s willingness to strengthen bilateral ties with China based on mutual respect and strategic cooperation.
As India recalibrates its trade strategy, the widening deficit with China remains a key challenge, blending economic pragmatism with national security considerations.
