India’s Trade Deficit with China Widens as Imports Surge; Market Access Remains a Concern

Bangkok/New Delhi: India’s widening trade deficit with China and the limited access available to Indian products in the Chinese market remain major concerns for New Delhi, Union Finance Minister Nirmala Sitharaman indicated during the IMF-World Bank annual meeting in Bangkok. Sitharaman highlighted the growing imbalance in bilateral trade, noting that India has been seeking better market access for its products for several years without significant progress. Non-tariff barriers, including regulatory and phytosanitary requirements, have emerged as a major obstacle for Indian exporters seeking to enter the Chinese market. India sees considerable export potential in generic medicines, bovine meat, vegetables and other perishable products, but gaining access to China remains a challenge. The issue assumes significance as the value of goods India purchases from China continues to far exceed its exports to the neighbouring country. India’s trade deficit with China reached $112.16 billion in the financial year 2025-26, according to trade figures, as imports rose to $131.63 billion against exports of $19.47 billion. The deficit reflects the substantial dependence of Indian industries on Chinese manufactured goods, machinery and intermediate products. Electronics and electrical components constitute a major share of India’s imports from China. Other important categories include industrial machinery, chemicals, pharmaceutical ingredients, plastics and automobile components. These products are widely used by Indian manufacturers across sectors such as electronics, automobiles, pharmaceuticals and infrastructure. India’s exports to China, meanwhile, include iron ore and other minerals, petroleum products, chemicals, engineering goods, seafood and selected agricultural commodities. Although Indian exports have increased, their overall value remains considerably below the cost of imports. The imbalance also highlights the difficulties Indian businesses face in expanding their presence in the Chinese market. Greater access for Indian pharmaceutical, agricultural and industrial products could create opportunities for exporters and help reduce the trade gap. Sitharaman indicated that India favours resolving trade differences through discussions rather than relying primarily on punitive tariffs and countervailing duties. However, the lack of progress on market access and the persistence of non-tariff barriers continue to complicate efforts to correct the imbalance. The growing deficit has added to the importance of strengthening domestic manufacturing, diversifying supply chains and expanding India’s export base. At the same time, Chinese components and raw materials remain significant inputs for several Indian industries, making the trade relationship economically important for both countries.