India-China trade hole: Deficit widens to $99.2 billion in 2024-25; how New Delhi plans to reduce dependence

India-China bilateral trade has expanded steadily over time, however the trade hole stays closely skewed in China’s favour, elevating long-standing issues in New Delhi.Prime Minister Narendra Modi, throughout his current assertion on August 29, mentioned it’s vital for India and China to work collectively to stabilise the worldwide financial order. He emphasised that India is ready to advance bilateral relations from a strategic and long-term perspective, primarily based on mutual respect, mutual curiosity, and mutual sensitivity.Here’s a better take a look at the trade-related points shaping the India-China financial relationship:Bilateral trade figures and the widening deficitDuring April-July 2025-26, India’s exports to China rose 19.97% to $5.75 billion, whereas imports elevated 13.06% to $40.65 billion. In the 2024-25 fiscal 12 months, India exported items price $14.25 billion to China, whereas imports reached $113.5 billion, in accordance to PTI.The trade deficit—calculated because the distinction between imports and exports—has expanded from $1.1 billion in 2003-04 to $99.2 billion in 2024-25. China accounted for round 35% of India’s whole trade imbalance, which stood at $283 billion final fiscal. The deficit was $85.1 billion in 2023-24.Why the trade deficit is a priorityExperts be aware that the trade hole isn’t just giant however structural. China now dominates India’s import basket throughout a number of industrial classes, together with prescription drugs, electronics, development supplies, renewable power, and client items, in accordance to assume tank GTRI.GTRI evaluation exhibits that in sure key merchandise, China provides over 75% of India’s wants. For instance:

GTRI Founder Ajay Srivastava warns that such overwhelming dependence offers Beijing potential leverage over India, making provide chains a attainable software of stress throughout political tensions.India’s share of bilateral trade has declined to 11.2% immediately from 42.3% twenty years in the past. However, the commerce ministry clarifies that the majority imports from China are uncooked supplies, intermediate merchandise, and capital items—together with auto parts, digital components, cell phone components, equipment, and energetic pharmaceutical substances—that are later used to produce completed items for home consumption and exports. The dependence largely displays the hole between home provide and demand.Measures to reduce import dependenceIndia has taken a number of steps to curb dependence on Chinese imports. Production-linked incentive (PLI) schemes have been launched for greater than 14 sectors to increase home manufacturing. Stricter high quality requirements, testing protocols, and necessary certification are additionally being enforced to forestall substandard merchandise from coming into the market.The authorities encourages Indian companies to discover various suppliers to diversify provide chains and reduce reliance on single sources. Authorities repeatedly monitor import surges and take corrective motion when needed.Additionally, the Directorate General of Trade Remedies (DGTR) is empowered to suggest trade remedial measures towards unfair practices. India has imposed anti-dumping duties on a number of Chinese items, starting from chemical compounds to engineering merchandise, to defend home producers from cheaper imports.Implications of the rising trade deficitThe ballooning trade deficit exerts stress on overseas trade reserves and will increase dependence on exterior suppliers. While cheaper imports might profit shoppers in the brief time period, they’ll harm native producers. Over-reliance on imports may additionally lead to forex depreciation, driving up the price of imported items and fuelling inflation.Experts warn that such dependence reduces incentives to construct home manufacturing capability in strategic sectors, probably slowing long-term industrial progress and innovation.