- China has overtaken the United States to become India’s largest trading partner in the financial year 2025-26, with bilateral trade reaching USD 151.1 billion, while the country’s trade deficit with Beijing widened to USD 112.16 billion during the period.
- This development highlights evolving economic ties and changing global supply chains, with China strengthening its position in India’s import-export ecosystem.
Key Highlights:
- The US was India’s largest trading partner for four consecutive years till 2024-25.
- India’s exports to China rose 36.66 per cent to USD 19.47 billion during the last fiscal year, while imports increased 16 per cent to USD 131.63 billion.
- The trade deficit swelled to an all-time high of USD 112.6 billion in 2025-26 as against USD 99.2 billion in 2024-25.
- The country’s outbound shipments to the US grew marginally 0.92 per cent to USD 87.3 billion during the last fiscal year, while imports increased 15.95 per cent to USD 52.9 billion.
- The trade surplus declined to USD 34.4 billion in 2025-26 from USD 40.89 billion in 2024-25.
- The major trading partners with which India recorded negative exports growth in 2025-26 include the Netherlands, the UK, Singapore, Bangladesh, Saudi Arabia, Australia, France, South Africa, and Malaysia.
- Exports to the UAE, Germany, Hong Kong, Italy, Nepal, Brazil, Spain, Belgium, and Vietnam registered positive growth last fiscal year.
Why China Leads:
Several factors contributed to China’s rise:
- Strong manufacturing and export capacity
- Competitive pricing of goods
- Increased demand for electronics, machinery, and industrial components
India continues to rely heavily on Chinese imports for key sectors such as electronics, pharmaceuticals, and infrastructure.
What About the United States?
The United States remains a major trade partner, especially in services, technology, and high-value exports. However, overall trade volume has been surpassed by China in this fiscal year.
Economic Impact
- May influence India’s trade policies and diversification strategies
- Raises concerns over trade imbalance
- Highlights need for boosting domestic manufacturing
Future Outlook
Experts believe India may focus on reducing dependency while strengthening global partnerships. The shift underscores the importance of resilient supply chains and economic strategy.
Source: HT