A major shift has been observed in the dynamics of global trade. According to government data, in the financial year 2025-26, China has once again surpassed the United States to become India’s largest trading partner. The US had held this position for the preceding four years (from 2021-22 to 2024-25); however, a significant surge in bilateral trade this year has propelled China to the top spot.
Key Trade Statistics
According to data released by the Ministry of Commerce, the total bilateral trade between India and China reached an all-time high of $151.1 billion in the financial year 2025-26. However, a concerning aspect of this trade expansion is India’s widening ‘trade deficit.’ India’s trade deficit with China has risen to $112.16 billion, up from $99.2 billion in the previous financial year (2024-25).
Export and Import Status
With China
During the last financial year, India’s exports to China surged by 36.66% to reach $19.47 billion. Conversely, imports from China grew by 16%, reaching $131.63 billion.
With the United States
On the other hand, India’s trade with the United States witnessed somewhat slower growth. Exports to the US increased by a mere 0.92% to $87.3 billion, while imports rose by 15.95% to $52.9 billion. Consequently, India’s trade surplus with the United States narrowed to $34.4 billion.
Historical Context and Other Countries
From a historical perspective, China served as India’s top trading partner from 2013-14 to 2017-18, and again in 2020-21. Prior to China, the United Arab Emirates (UAE) held this position. According to current data, India has recorded positive growth in exports to countries such as the UAE, Germany, Italy, and Vietnam. However, a decline has been observed in exports to key nations like the Netherlands, the UK, Saudi Arabia, and Australia. Meanwhile, imports from Russia and Australia have also witnessed a decline.
Economic experts believe that the surge in imports from China is primarily driven by electronics, machinery, and intermediate goods—items that are essential for India’s manufacturing sector. Nevertheless, the massive trade deficit of $112 billion poses a significant challenge for policymakers, as it highlights the domestic market’s reliance on Chinese goods.
