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India's trade deficit with China has increased to a $99.2 billion, raising alarms over economic dependencies and potential dumping practices.​

India’s Trade Deficit with China

A trade deficit happens when a country imports (buys) more goods than it exports (sells) to another country.

In 2024-25, India imported $113.5 billion worth of goods from China but exported only $14.3 billion. This results in a $99.2 billion deficit. 

India’s imports from China are increasing, especially for:

• Electronics: In March 2025 alone, imports jumped 25% to $9.7 billion.
• Electric batteries and solar cells: These power electric vehicles and solar panels, key to India’s green energy push.
• Consumer durables: Items like fridges and washing machines.

India exports things like iron ore, cotton, and marine products to China, but these are low-value compared to China’s high-tech exports. This imbalance—buying expensive tech and selling basic goods—widens the gap.

Trade experts say India’s economy depends too much on Chinese components. For example, India’s own electronics and pharma exports depend on parts imported from China.

U.S. Tariffs

The U.S. President Donald Trump’s trade policies hit huge tariffs (up to 145%) on Chinese goods to make them costlier in the U.S., aiming to boost American manufacturing. At the same time, he paused tariff hikes on India and other countries for 90 days.

Impact on India

• Dumping fears: With U.S. markets less welcoming, Chinese companies might “dump” their goods—sell them cheaply—in other countries like India to clear inventory.
• Global trade shifts: The U.S.-China trade war (with China retaliating with 125% tariffs on U.S. goods) is shaking global markets. India, caught in the middle, faces risks and opportunities.

The Indian government is on alert. It plans to:

• Set up a monitoring unit: This will track cheap imports from China and other countries to prevent dumping.
• Warn companies: Firms are told not to help foreign exporters dodge U.S. tariffs by rerouting goods through India.
• Boost local production: Schemes like the Production-Linked Incentive (PLI) aim to make more electronics and pharma goods in India, reducing reliance on China. But these schemes still need Chinese parts, which fuels imports.

India is also negotiating with the U.S. to lower a 27% tariff on Indian goods (like electronics and jewelry) and secure a trade deal. The U.S. has a $46 billion trade deficit with India, and Trump wants to shrink it, putting pressure on India to open its markets. 

A big trade deficit with China worries experts for several reasons:

• Economic dependence: China supplies key industrial goods (electronics, machinery, chemicals), making India vulnerable. If China cuts supplies, Indian industries could stall.
• Currency pressure: Paying for imports weakens the rupee, making future imports costlier and raising inflation.
• Lost opportunities: Low exports to China mean India isn’t tapping into a huge market. Barriers like China’s strict rules on Indian pharma and IT exports don’t help.
• Dumping risks: Cheap Chinese goods could flood India, hurting local manufacturers, especially small businesses.

Experts call this a “wake-up call.” India’s exports to China are stuck, while imports keep climbing, showing deep structural issues in trade

Way Forward for India

Monitor imports to block dumping, especially from China and ASEAN. Strengthen local supply chains to cut reliance on Chinese parts.

Boost exports to China by tackling barriers in pharma, IT, and agriculture. Invest in high-tech manufacturing (e.g., chips, batteries) to compete globally.

Use the U.S.-China rift to attract investment (like Apple’s iPhone production) and position India as a trade hub.

The trade deficit is a symptom of deeper issues—low export diversity, weak manufacturing, and global trade tensions. Fixing it needs bold policies and smart diplomacy.

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Source:

REUTERS

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