China-India Trade Balance: A 2025 Reality Check
China-India Trade a lot. But the problem? India buys way more from China than China buys from us.
That gap is called the trade balance (or honestly, the trade imbalance).
In simple words:
India imports a mountain of stuff from China and exports only a small hill.
That creates a trade deficit – meaning India spends more money buying from China than it earns by selling to China.
This article breaks down why this happens, what we trade, and why this matters.
Recent Bilateral Trade Data (India ↔ China)
China has stayed one of India’s biggest trading partners for years.
But the numbers show one thing clearly: the deficit keeps growing.
Here’s the simple picture:
India imports: Electronics, machinery, chemicals, and other manufactured items
India exports: Mostly raw materials like minerals, cotton, and some chemicals
Result: Imports = Huge. Exports = Meh. Deficit = Big.
Fiscal-Year Trade Volume & Trade-Balance Trend (15-20 years)
If you look at the last 15-20 years, one pattern pops out:
Imports from China shoot up fast. Exports move slowly.
Imagine two lines on a chart:
The import line climbs like it’s running up a mountain.
The export line moves like it’s taking a slow evening walk.
That’s why the trade gap keeps getting wider.
FY 2024-25 Key Numbers: Imports, Exports, Deficit
Here’s the vibe:
Imports = Still very high
Exports = Slight growth
Deficit = Still huge
India is trying to reduce this gap, but honestly, not much has changed yet.
What India Imports from China - Top Commodities & Sectors
Let’s cut to the chase : India imports stuff it needs quickly and cheaply:
Mobile phones & components
Laptops and electronics
Machinery
Solar panels
Chemicals
Pharma raw materials
Toy parts, auto parts, metal products
In short: China is India’s hardware store.
If something needs to be built – chances are, parts came from China.
What India Exports to China : Key Commodities & Trends
Compared to what India imports, exports are low-value items:
Iron ore
Cotton
Some chemicals
Seafood
Granite and raw materials
Basically, India sells more raw stuff and buys more high-value finished goods.
That’s never a great trade strategy.
Why the Trade Imbalance Exists: Structural Causes
Time for the honest explanation : India isn’t losing because of one single reason.
It’s a mix of structural problems:
India’s manufacturing isn’t as large or fast
China produces at cheaper prices
China is part of global supply chains; India isn’t (yet)
India depends heavily on Chinese raw materials
Many Indian industries rely on imported components
In short: China builds things, India buys things : and that imbalance shows up in trade numbers.
Domestic Industry Gaps
Here’s what India struggles with:
Electronics manufacturing
Machinery
Renewable energy equipment
Pharma ingredients
These are exactly the products India imports the most.
That means India depends on China for crucial items.
Demand-Side Pressure
India’s economy is growing fast.
More growth = More demand.
More demand = More imports from China (because it’s cheap and available).
India’s infrastructure boom, tech boom, and renewable-energy push all rely heavily on Chinese components.
Global Supply Chains & Value Chains
China is deeply connected to the world’s supply chain.
Think of it as the world’s giant factory.
India is still not part of that club at the same level.
So naturally, most parts and products still come from China.
Recent Trends & 2024-25 Surge in Deficit: What Changed
A few things made the deficit jump again:
India’s import of electronics skyrocketed
Solar and EV markets expanded
Raw material prices changed
Indian exports didn’t grow enough
Even when India tries reducing imports, industries still need Chinese components.
So the deficit doesn’t shrink much.
Strategic Risks & Economic Implications
Here’s the uncomfortable truth:
Being dependent on one country is risky – especially when relations are tense.
Risks include:
Supply chain shocks
Price manipulation
Random import restrictions hurting industries
Security concerns in tech
If trade gets disrupted, Indian manufacturing could slow down badly.
Dependence on Critical Imports
India relies on China for:
API (pharma raw materials)
Chips and electronics
Solar equipment
Industrial machines
These aren’t small things – these are essential industries.
That’s why the dependence is a big concern.
Impact on Domestic Manufacturing
When India imports cheap goods from China:
Local industries struggle
Startups can’t compete with cheap prices
Jobs don’t grow fast
India’s manufacturing goals slow down
The trade gap isn’t just a number – it affects the whole economy.
Policy Response: What India Has Done / Should Do
India isn’t sitting quietly.
Here’s what’s happening:
Higher tariffs on certain Chinese goods
Anti-dumping duties
Pushing “Make in India”
Incentives for electronics, solar, semiconductor industries
Trade diversification (Japan, South Korea, Vietnam)
But honestly?
These steps take years to show results.
Make in India & Import Substitution
What India needs to push harder:
Boost local manufacturing
Attract foreign tech companies
Build supply chains in India
Reduce dependency on raw materials from China
Create better trade deals with other countries
This is a slow game – but India must play it.
What Needs More Transparency: Data Gaps, Services & FDI
Most data focuses only on goods.
But services, investments, and tech collaborations between India and China are not openly tracked or discussed.
That hides the full picture.
India needs more transparent reporting on:
Services trade
FDI from Chinese companies
Investment via third countries (Singapore, Hong Kong, etc.)
Comparative: India’s Trade Balance with Other Countries
To put it simply:
India’s biggest trade deficit is with China – way bigger than with any other major economy.
Even when India has deficits with others, the China gap is massive.
Outlook 2026-2030
What can happen in the future?
Best-case:
India builds strong manufacturing
Electronics and machinery production rises
Imports shrink
Exports improve
Deficit narrows
Worst-case:
India stays dependent
China’s dominance increases
Deficit grows even bigger
Right now, India is somewhere in the middle : trying to fix the problem but still stuck in the old pattern.