India's Trade Deficit with China and Global Trade Dynamics
Trade Deficit with China
India's trade deficit with China approached $100 billion in FY25, according to the commerce department's recent data.
- Chinese imports increased by 11.5% to $113.45 billion.
- Indian exports to China decreased by 14.5% to $14.2 billion.
- The trade deficit widened to $99.2 billion from $85 billion the previous year.
This rise in imports is causing concern amid a trade war between the US and China, where tariffs exceed 100%.
Concerns Over Import Surge
There is a fear that high costs in the US market might increase imports to India, impacting domestic industries. March saw imports from China rise by a fourth to $9.67 billion, while exports slightly dropped.
- Key import categories include electronic goods, electric vehicle batteries, solar cells, and industrial inputs.
Ajay Srivastava of the Global Trade Research Initiative (GTRI) argues that India's Production-Linked Incentive (PLI) scheme may be inadvertently boosting imports due to reliance on foreign components.
Other Trade Partners and Trends
India's exports to the US grew by 35% to $10.1 billion in March, driven by potential reciprocal tariffs.
- India recorded a $6.4 billion trade surplus with the US.
- US remained India's largest trading partner in FY25.
Exports to several countries, including the UAE, Netherlands, and Singapore, saw contractions. Conversely, exports to the UK, Germany, and Australia rose.
Import and Export Dynamics
Overall, India's imports rose by 11.4% to $63.5 billion in March.
- Import growth was led by China, the US, UAE, Saudi Arabia, and Singapore.
- Import dependency reduced for countries like South Korea, Switzerland, and Indonesia.
