The country’s trade deficit with China has reached $99 billion in FY25, up from $85 billion a year ago, data from the Ministry of Commerce shows.
The growing divide between the two Asian neighbours is due to fall in India’s exports to China, even as imports from the latter keep growing at a healthy pace. India’s exports to China fell by 14.5% to $14.25 billion in FY25, while imports from China grew by 11.6% to $113.5 billion during the year. India’s exports to China in FY25 have fallen below 2019-20 levels.
In March 2025 alone, imports from China rose by 25% to $9.6 billion from $7.7 a year ago. Exports from India were a paltry $1.55 billion during the month, a decline of 3%. The surge in Chinese imports in FY25 was driven by rising demand for electronics, EV batteries, solar cells, and key industrial inputs. As per the Global Trade Research Initiative, China is India’s top supplier in all eight major industrial product categories. “The PLI schemes are fueling import growth due to their reliance on imported components,” says Ajay Srivastava, founder, GTRI. He further said these numbers are a wake-up call for India, which needs to fix its internal manufacturing gaps and invest in deep industrial capabilities. “Without that, the deficit will only grow—and so will our dependency,” says Srivastava.
Major Indian exports to China include petroleum products, minerals, marine products, organic chemicals and electronic products. The growing trade deficit between the two countries is worrying amid the trade war between China and the US, which could lead to dumping of cheaper goods by China in India. As per commerce ministry officials, a recent assessment by the ministry has highlighted the risk of goods dumping into India due to tariffs. “Rising US costs may prompt exporters from countries like China, Vietnam and Indonesia to divert goods to India, triggering import surge,” said a ministry official.
The government has formed an Inter-ministerial panel for Import Surge Monitoring set up with representation from the Department of Commerce, Directorate General of Foreign Trade (DGFT), Department of Customs and DPIIT to keep a check on likely dumping by countries like China, Vietnam and Indonesia.