No tough chapter: India balances trade with China, pushes exports –

India is adopting a strategic approach in its trade relations with China, aiming to expand exports and boost domestic manufacturing while gradually reducing its dependence on Chinese inputs.

A senior government official told PTI that the focus is on maintaining balance rather than seeking a complete break from Beijing.The executive said that India is boosting its exports to China by boosting domestic production and diversifying its supplier base, while continuing to rely on Chinese inputs as complete decoupling is not possible.“While India may not have difficulty decoupling from China, it is creating its own capabilities in terms of having a resilient supply chain and also in terms of increasing our export capabilities,” the official said.The official explained that India largely imports raw materials, intermediate goods and capital equipment from China. These include automotive components, electronic parts and assemblies, mobile phone components, related machinery and parts, and active pharmaceutical ingredients, all of which provide finished products, fueling domestic manufacturing and exports.“Whatever China supplies is the backbone of India’s production.

Some consumer durables are also coming but in smaller numbers, the official said.Trade data reflects this dependence along with growing export momentum. India’s exports to China rose by about 37% to $19.47 billion in 2025-26, up from $14.25 billion in 2024-25.In contrast, imports from China rose by 16% to $131.63 billion from $113.44 billion during the same period, which led to a widening of the trade deficit from $99.2 billion to $112.6 billion. For perspective, exports were only $0.71 billion and imports were $1.11 billion in the period 1997-1998.

Export growth in the last financial year was observed in sectors such as printed circuit boards, electrical appliances, telephone systems, shrimp, aluminum alloy, black tiger shrimp, ships and some agricultural commodities. However, the official noted that India needs to expand its export basket further to increase its share in China’s imports.Meanwhile, the rise in imports was driven by demand for electronics, electrical machinery, pharmaceutical components, APIs, automobile parts, telecom tools, industrial machinery, computers and their accessories, organic chemicals, batteries, plastic raw materials, residual chemicals and bulk medicines.“All these goods will eventually enter our industrial process. As we industrialize, imports will naturally increase,” the official added.To address this imbalance, the government is intensifying efforts to boost local manufacturing. The production-linked incentive system remains a key part of this push, helping companies build value chains within the country, although industries still require imported capital goods and intermediate inputs.In addition, the government is working to identify products where dependence on China is high and costs are competitive, and is exploring sourcing options from markets such as Taiwan, South Korea, Japan and the European Union.An Inter-Ministerial Committee (IMC) has been formed to closely monitor trade flows and take corrective measures when needed. The committee includes representatives of the Ministry of Commerce, the Revenue Administration, the Department for the Promotion of Industry and Internal Trade, the General Directorate of Foreign Trade, and the General Directorate of Commercial Intelligence and Statistics.