India's exports to China have demonstrated remarkable resilience, climbing for seven consecutive months in FY26 and providing a crucial buffer against the impact of US tariffs. This sustained growth highlights the adaptability of Indian exporters and the increasing integration of India into Asian production networks.
Key Trends and Figures
In the April-October period of FY26, India's exports to China surged by 24.7% year-on-year, reaching $10.03 billion. This consistent monthly increase, peaking at a 42% jump in October, was fueled by strong shipments of petroleum products, telephone instruments, and marine goods. In the first half of FY26 (April-September), exports rose by approximately 22% to $8.41 billion, compared to $6.90 billion in the same period last year. September 2025 alone saw a 34% increase, with exports reaching $1.47 billion from $1.09 billion in September 2024.
Drivers of Export Growth
Several factors have contributed to this export surge. Light oils and petroleum preparations led the way, more than doubling to $1.48 billion in the first half of FY26 from $686 million a year earlier, marking a 116% increase. Exports of telephone set components also experienced substantial growth, jumping 162% from $178 million to $468 million.
Other significant contributors include:
- Frozen shrimps and prawns: Increased by 25%, reaching $468 million.
- Aluminum: Rose by 59% to $192 million.
- Sulphur: Soared by 175% to $117 million.
Notably, new categories such as organic light-emitting diode (OLED) flat panel display modules have emerged, reaching $246 million in the first half of FY26 from near zero the previous year.
Impact of US Tariffs
The increase in exports to China has been particularly pronounced since August 2025, coinciding with the imposition of steep 50% tariffs by the United States on several Indian goods. This prompted Indian exporters to diversify their trade routes, redirecting some trade flows to China. Goods like shrimps and aluminum, previously heavily reliant on the US market, have found strong demand in China.
Expert Opinions
Ajay Sahai, Director General and CEO of the Federation of Indian Export Organisations (FIEO), noted that the export surge reflects the adaptability and competitiveness of Indian exporters, especially in value-added segments like electronics, seafood, and metals. He emphasized that this trend signifies both supply-chain realignment and India's deeper integration into Asian production networks.
Overall Trade Dynamics
Despite the export growth, India still faces a significant trade deficit with China. During April-October 2025, India's imports from China stood at $73.99 billion, compared to $66.13 billion in the same period last year. In FY25, the trade deficit between the two countries was $99.2 billion. This imbalance remains a concern for New Delhi, prompting efforts to boost domestic manufacturing and reduce reliance on Chinese goods.
Broader Economic Implications
While rising exports to China offer a cushion against US tariffs, the US remains a crucial market for India. The US tariffs have negatively impacted certain sectors, such as gems and jewelry, leather, and textiles. Economists anticipate a reduction in US tariffs on Indian exports to 15%-20% by the end of the year, potentially leading to a GDP forecast revision if a comprehensive trade deal is signed. A rollback of tariffs could result in a 20-25% recovery in US-bound exports for FY26.
