India has repeatedly flagged its concern over the ballooning commerce deficit and the non-trade obstacles confronted by Indian items within the Chinese market.
PM Modi’s go to to Japan and China
On August 29, Prime Minister Narendra Modi stated it is crucial for India and China to work collectively to carry stability to the world financial order as he asserted that New Delhi is able to advance bilateral ties from a strategic and long-term perspective primarily based on mutual respect, mutual curiosity and mutual sensitivity.
A listing of questions and solutions to know the trade-related points between the 2 nations:
How a lot is the bilateral commerce between India and China?
During April-July 2025-26, India’s exports rose by 19.97% to $5.75 billion, whereas imports elevated by 13.06% to $40.65 billion. In 2024-25, India’s exports stood at $14.25 billion, whereas imports had been $113.5 billion.
Trade deficit (distinction between imports and exports) rose from $1.1 billion in 2003-04 to $99.2 billion in 2024-25. China’s commerce deficit accounted for about 35% of India’s whole commerce imbalance ($283 billion) within the final fiscal. The hole was $85.1 billion in 2023-24.
Why is the deficit with China a priority?
Because it isn’t solely giant, but additionally structural. What makes it extra critical is that China now dominates India’s import baskets throughout nearly each industrial class — from prescribed drugs and electronics to development supplies, renewable vitality, and shopper items , in keeping with assume tank GTRI.
For which key merchandise China’s share is over 75%?
GTRI evaluation states that in antibiotics like erythromycin, China provides 97.7% of India’s wants; in electronics, it controls 96.8 per cent of silicon wafers and 86 per cent of flat panel shows; in renewable vitality, 82.7% of photo voltaic cells and 75.2% of lithium-ion batteries come from China.
Even on a regular basis merchandise reminiscent of laptops (80.5% share), embroidery equipment (91.4%), and viscose yarn (98.9%) are overwhelmingly Chinese-sourced.
What is the chance of accelerating dependence on China?
GTRI Founder Ajay Srivastava says overwhelming dominance provides Beijing potential leverage towards India, turning provide chains right into a device of stress in instances of political rigidity. The imbalance is deepening as India’s exports to China proceed to say no, lowering India’s share in bilateral commerce to only 11.2% right now from 42.3% 20 years in the past.
However, in keeping with the Commerce Ministry, many of the items imported from China are uncooked supplies, intermediate merchandise and capital items like auto elements, digital elements, cell phone elements, equipment and lively pharma elements. Thes are used for making completed merchandise, that are additionally exported.
India’s dependence on imports in these classes is essentially as a result of hole in home provide and demand, the Ministry stated.
What steps India has taken to chop its import dependence?
Introduction of manufacturing linked incentive schemes for over 14 sectors to spice up home manufacturing; stricter high quality requirements and measures for quality control, testing protocols, and obligatory certification to verify substandard and poor-quality merchandise out there and defend customers’ curiosity.
The authorities encourages Indian enterprise institutions to discover different suppliers to diversify their provide chains and scale back dependency on single sources of provide.
It additionally screens the surge in imports regularly and takes acceptable motion. Further, the Directorate General of Trade Remedies (DGTR) is empowered to suggest commerce remedial actions towards unfair commerce practices.
India has imposed anti-dumping duties on quite a lot of Chinese items and sectors reminiscent of chemical compounds to engineering gadgets to guard home companies from low-cost imports.
What is the impression of rising commerce deficit?
Pressure on overseas alternate reserves, dependence on exterior suppliers, cheaper imports can harm native producers; can result in foreign money depreciation pushing value of imported items, fuelling inflation; and over-reliance on imports reduces incentives for constructing home capability in key sectors, slowing long-term industrial progress.
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