India's exports to China have witnessed a notable surge in the first nine months of the fiscal year 2025-26, growing by 36.68%. This increase signals a positive shift in the economic relationship between the two countries, especially considering the backdrop of warming ties and easing of certain trade restrictions.
The growth in exports was 36.68% from April to December 2025, resulting in India exporting goods worth $14.25 billion. Key drivers of this increase include mobile phone components and naphtha. Agricultural and marine products such as dried chillies, black tiger shrimp, green gram, Vannamei shrimp, and oil-cake residues have also contributed. Moreover, exports of aluminium and refined copper billets have seen significant growth. In the electronics sector, populated printed circuit boards, flat panel display modules, and electrical apparatus for telephony have shown notable increases.
Even with this increase, India's trade deficit with China remains substantial. While Indian exports to China increased, imports from China saw an even sharper rise, leading to a widening of the trade deficit. The trade deficit with China reached $99.2 billion in 2024-25. Overall bilateral trade reached an all-time high of $155.62 billion in 2025.
This export growth is partially attributed to the global supply chain shifts and a recent improvement in India-China relations. Recent developments, such as eased visa rules and discussions aimed at enhancing trade relations, including potential relaxations on foreign investment, reflect this thaw. In late December 2025, Beijing and New Delhi were gradually moving to normalize economic ties. Direct flights between India and China have also resumed after a 5-year suspension, further indicating improving relations.
Despite the positive momentum, analysts advise caution. They highlight India's continued reliance on Chinese imports and the imperative to enhance competitiveness and diversify its export basket. Diversifying exports to include more processed goods, such as processed shrimps, is seen as crucial to reducing the trade deficit.
The rise in exports comes at a crucial time when India is facing high tariffs and potential penalties from the United States, its main trading partner. The increased trade with China offers some relief amidst these challenges.
Looking ahead, both countries are exploring ways to strengthen trade and economic cooperation. China has urged the WTO to set up a panel in the case against India's incentive schemes for the auto, battery, and EV sectors.
