India’s Growing Trade Deficit with China: Concerns Over Economic Dependence Explained

Fast Summary

• Bilateral Trade Figures: india’s exports to China rose by 19.97% from April-July 2025-26, reaching $5.75 billion, while imports increased by 13.06% to $40.65 billion; in FY 2024-25, exports stood at $14.25 billion and imports at $113.5 billion.
• Trade Deficit: India’s trade deficit with China grew significantly from $1.1 billion in 2003-04 to $99.2 billion in 2024-25, accounting for around 35% of the nation’s total trade imbalance.
• Sectoral Dependence on Chinese Imports:

– Antibiotics: China supplies up to 97.7%.
– Electronics: dominates silicon wafers (96%) and flat-panel displays (86%).
– renewable energy: Supplies over 82% of solar cells and over three-fourths of lithium-ion batteries.
– Consumer goods such as laptops (80%) and embroidery machinery (91%) heavily depend on Chinese imports.

• Risks Highlighted:

– Structural dependence could give China economic leverage during political tensions, weakening India’s global position.
– Decline in India’s share of bilateral trade from two decades ago-now stands at just 11%.

Steps Taken By India:

1. Production Linked Incentive schemes launched across key sectors.
2. Improved testing protocols and stricter quality standards for imported products.
3. Promotion of alternative suppliers for a diversified supply chain structure; regular monitoring of import surges on essential goods.
4. Imposition of anti-dumping duties on several categories like chemicals and engineering items.

Potential Impact Issues Linked To Growing dependency:

Pressure on foreign exchange reserves; risk of inflation due exclusively derived dominance industrial stalling er family’s currency-safety steps

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