New Delhi, September 12 (Daily Kiran) : Prime Minister Narendra Modi and Chinese President Xi Jinping are scheduled to hold bilateral talks on Saturday evening, focusing on trade and investment issues. A key point of discussion will be India’s significant trade deficit with China.
In the fiscal year 2025-26, India’s exports to China rose by 36.62 percent, reaching $19.47 billion, up from $14.25 billion the previous year. However, imports from China also increased by 16.03 percent, totaling $131.63 billion, compared to $113.46 billion the year before. As a result, India’s trade deficit with China expanded from $99.21 billion in 2024-25 to $112.16 billion in 2025-26.
Bilateral trade in goods between India and China grew by 18.31 percent to $151.10 billion in 2025-26. China has now surpassed the United States to become India’s largest trading partner.
Despite the growth in trade, India’s trade deficit has been steadily increasing over the past few years. It stood at $83.2 billion in 2023-24, $73.3 billion in 2022-23, and $44 billion in 2021-22. This trend raises concerns about the need for a more balanced and sustainable trade relationship between the two nations.
The trade imbalance is not limited to consumer goods entering India. A significant portion of imports from China consists of essential industrial inputs, components, and capital goods, which are crucial for Indian manufacturers to produce goods and create jobs.
Key sectors affected include electronics, machinery, computers, and organic chemicals, which comprise approximately 66 percent of these imports. According to a report by the Global Trade Research Initiative (GTRI), China supplies about 43 percent of India’s electronics imports and 40 percent of machinery and computer imports. These inputs are vital for domestic manufacturing rather than merely consumer preferences.
India also imports over 40 percent of six essential minerals from China, exposing vulnerabilities in its renewable energy, electric vehicle (EV), and defense supply chains. If China were to halt exports of these materials to India, it could disrupt supply chains significantly.
The GTRI report emphasizes that this structural imbalance poses risks to India’s clean energy, electronics, and pharmaceutical sectors, potentially leading to disruptions in supply chains or restrictions on essential raw materials.
Meanwhile, China is expected to seek relaxed investment regulations in India, enabling its companies to invest in the rapidly growing Indian market.
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