India–China trade: Exports soar as $106 bn deficit looms

By Admin

20 Dec, 2025

India’s trade relationship with China is once again in focus after a sharp jump in exports during November 2025. While headline numbers show impressive growth, a closer look reveals that the gains are narrow, volatile, and insufficient to offset a rapidly widening trade deficit that is set to touch a record $106 billion.

Export Surge Driven by Few Products

According to a report by the Global Trade Research Initiative (GTRI), India’s exports to China rose nearly 90% year-on-year in November 2025 to $2.2 billion. Between April and November, shipments increased 33% to $12.2 billion from $9.2 billion in the same period last year.

However, this surge is not broad-based. A large part of the increase came from a handful of products rather than India’s traditional export basket. Naphtha, used as a petrochemical feedstock, emerged as the single biggest contributor. Its exports jumped 512% in October and rose 172% during April–October to reach $1.4 billion.

Selective Gains in Electronics

Electronics exports also recorded extraordinary but highly selective growth. Printed circuit board exports surged to $296.5 million in October, marking an 8,577% year-on-year increase. From April to October, these exports crossed $418 million, growing more than 2,000%.

Mobile phone component exports rose 82% to $362 million, an unusual trend considering India continues to import large volumes of these components from China. These gains, while eye-catching, do not reflect a structural shift in India’s export competitiveness.

Traditional Exports Lose Momentum

In contrast, some of India’s traditional exports struggled. Iron ore exports declined 1.2% in October and fell 30% during April–October. Shrimp exports showed only modest growth. GTRI noted that overall export growth to China remains concentrated in naphtha and a few atypical electronics items, rather than across a diversified product base.

Volatile Nature of Top Exports

India’s top three exports to China naphtha, iron ore, and shrimp have shown sharp year-on-year fluctuations.

Naphtha exports rose from $1.83 billion in FY2022 to $1.91 billion in FY2023, then dropped to $1.26 billion in FY2024 and remained flat in FY2025. Iron ore exports plunged from $2.49 billion in FY2022 to $1.40 billion in FY2023, surged to $3.64 billion in FY2024, and fell again to $1.89 billion in FY2025. Shrimp exports were relatively steadier but still declined from $924 million in FY2023 to $773 million in FY2025.

This uneven pattern suggests that India’s export performance is heavily influenced by Chinese demand cycles, pricing shifts, and policy changes rather than sustained market access.

Trade Deficit Touches Record High

Despite recent export growth, India’s trade imbalance with China continues to worsen. Exports fell from $23.0 billion in 2021 to $15.2 billion in 2022 and remained subdued through 2024. In 2025, exports are estimated at $17.5 billion, still well below earlier peaks.

Imports, on the other hand, surged from $87.7 billion in 2021 to an estimated $123.5 billion in 2025. This will push the bilateral trade deficit to a record $106 billion. Chinese customs data suggests an even wider gap, with the deficit estimated at $115.2 billion.

Mismatch in Trade Data Raises Concerns

The report also highlights discrepancies between Indian and Chinese trade data. In November, China recorded Indian exports at $1.9 billion, while India reported $2.2 billion. For January–November, China’s data showed higher import values than India’s reported figures.

Normally, imports are valued higher due to freight and insurance costs. India reporting lower import values than China’s export data is unusual and may indicate under-invoicing to reduce customs duties an issue that GTRI says warrants investigation.

Imports Remain Deeply Concentrated

India’s dependence on Chinese imports remains strong. Nearly 80% of imports come from electronics, machinery, organic chemicals, and plastics. Electronics imports alone touched $38 billion between January and October 2025, including mobile phone components, integrated circuits, laptops, solar modules, batteries, and memory chips.

Machinery imports reached $25.9 billion, organic chemicals $11.5 billion, plastics $6.3 billion, steel products $4.6 billion, and medical and scientific equipment $2.5 billion. These sectors are difficult to substitute quickly, explaining the persistence of the large trade deficit.

What This Means for India–China Trade

The data paints a clear picture of narrow export gains and deep import dependence. Short-term spikes in exports, driven by a few products, are unlikely to change the structural imbalance in India–China trade.

As GTRI’s Ajay Srivastava concludes, without a sustained strategy to expand competitive manufacturing, reduce reliance on Chinese imports in key sectors, and strengthen trade monitoring, India’s trade deficit with China will remain entrenched despite occasional export surges.