India’s trade with China is one of those stories you can’t summarize in a single line. On paper, trade is booming—billions in commerce, factories humming, consumers enjoying affordable goods. But when you look closer, a widening gap is hard to ignore. In FY 2024‑25, India imported US$113.45 billion worth of Chinese goods, while its exports to China dropped 14.5% to US$14.25 billion. That leaves a record trade deficit of US$99.2 billion. Numbers like that don’t just sit on balance sheets—they ripple across factories, job markets, and policy desks.
I spoke with a few analysts, and they framed it this way:
“India is running fast, trying to catch up, yet China seems to be leading the finish line. And they’re not wrong. India’s imports are high-value industrial goods—electronics, EV batteries, solar cells—while exports are largely raw materials and low-tech products.”
Trade has grown significantly over the last decade. Indian consumers get access to affordable electronics, smartphones, and machinery. Industries rely on Chinese inputs for production, quality, and competitiveness.
But the structural imbalance is glaring. Imports keep surging while exports stagnate. It’s not just about numbers—it’s about strategic dependency. Industries like electronics, renewable energy, and pharmaceuticals rely heavily on Chinese components. Supply disruptions or policy changes in China could hit Indian factories hard.
India isn’t standing still. The government has rolled out Production-Linked Incentive (PLI) schemes across 14 sectors, tightened quality controls, and is pushing for supplier diversification. The aim: reduce dependency without slowing growth.
Analysts liken it to a relay race. India is sprinting, but it needs to also secure its baton—its industries and supply chains—before the next lap.
Trade isn’t just numbers; it’s politics too. Passes like Lipulekh, Shipki La, and Nathu La were closed after the Galwan Valley clash in 2020. Now, slowly, India and China are reopening these channels. Border trade might be small in volume, but it signals goodwill and lays the groundwork for stability in broader trade relations.
Diplomatic gestures matter too. The Chinese Ambassador to India, Xu Feihong, has expressed support for Indian investments into China. Behind these statements is a recognition: even rivals need each other in the global supply chain game.
Here’s where it gets personal. Factories across India are feeling the pressure. MSMEs in electronics, solar equipment, and EV components struggle to compete with cheaper imports. Average wages have slowed in manufacturing hubs, and job growth in some sectors has plateaued.
On the flip side, sales, production support, and non-core service roles are seeing growth—but often at lower pay. Analysts point to rare-earth curbs by China: over 21,000 jobs in India’s audio-electronics sector are under threat.
The government’s PLI schemes are a strategic counter. Incentives in electronics, textiles, and pharmaceuticals are creating new employment hubs, nudging industries toward domestic manufacturing, and slowly rebalancing the labor market.
Trade isn’t just about policy—it’s about people and companies navigating opportunities and constraints. Take Apple, for instance. In FY 2024-25, iPhone production in India surged 60%, reaching ₹1.89 lakh crore. Foxconn, Tata Electronics, and Pegatron are assembling devices in India, partially thanks to government PLI incentives.
Chinese firms like Haier, Shanghai Highly Group, and SAIC Motor are also adapting. Equity restructuring, partnerships, and joint ventures allow them to operate while complying with India’s FDI norms. Senior executives, like Vivo India’s Jerome Chen or Realme’s Michael Guo, are taking more active leadership roles locally, enabled by relaxed visa and work-permit rules.
It’s a delicate dance of corporate strategy and government policy—one misstep could affect billions in trade and thousands of jobs.
Financially, the picture is clear. Imports of electronics, EV batteries, and solar cells surged 25% YoY in some months. That puts pressure on India’s foreign exchange reserves while undercutting domestic manufacturers. Exports to China have remained slow, limiting relief from the trade deficit.
India is eyeing anti-dumping duties, tighter import rules, and domestic manufacturing incentives to correct the imbalance. With the right moves, this trade relationship can be recalibrated. Without them, the deficit could erode India’s financial foundations, weaken the rupee, and strain industries.
India-China trade is a story of contrasts: opportunities intertwined with vulnerabilities. India gains access to technology, affordable goods, and industrial inputs, but the structural deficit, strategic dependence, and competitive pressures are constant challenges.
The government’s policies—PLI schemes, import diversification, stricter certification, and border trade reopening—are steps in the right direction. Yet the finish line isn’t just trade volume—it’s about sustainable growth, industrial capability, and strategic autonomy.
India is running fast. The question is whether it can change the dynamics, narrow the deficit, and even the race. If successful, India could transform from a participant in this trade marathon to a formidable contender—one capable of dictating its pace, rather than chasing someone else’s.
Relevant Pages You’d Like to Check:
High-value imports like electronics and EV components outpace low-value Indian exports, leading to a structural imbalance.
Access to affordable goods, industrial inputs, technology transfers, and infrastructure investment.
Supply chain disruptions, strategic vulnerabilities, and exposure to geopolitical tensions.
Through PLI schemes, stricter import quality standards, supplier diversification, and trade remedies like tariffs.
Electronics, renewable energy, EV manufacturing, pharmaceuticals, and MSMEs exposed to imports.
Yes. Firms like Haier, SAIC Motor, and Shanghai Highly Group are active through partnerships, joint ventures, and infrastructure projects.
With strengthened domestic manufacturing, diversified suppliers, and strategic export initiatives, India has a path to narrowing the deficit.
Shares of Yes Bank and Union Bank of India gained up to 3% on December…
DGCA Steps In With Temporary Rule Relaxation as IndiGo Flight Cancellations Deepen Across India In…
Petronet LNG’s stock saw a sharp upmove on December 4, rising more than 4 percent…
The domestic equity market staged a sharp recovery on Friday as the Sensex surged over…
India’s financial markets have entered a phase defined by conflicting forces, as the Reserve Bank…
The momentum in public sector bank (PSU bank) stocks took a noticeable pause this week…
This website uses cookies.