India’s trade deficit with China surges to record level, nears $100 billion

New Delhi: India’s trade deficit with China surged to a record level in the fiscal year ended March 31, almost touching the $100 billion-mark, latest government data showed, even as officials fear that the Indian market may see a deluge of Chinese goods, with the US slapping a 245% tariff on imports from China.

India exported goods worth $14.25 billion to China in 2024-25, a 14.4% dip from $16.66 billion the previous financial year (2023-24), according to detailed trade data released by the commerce ministry on Wednesday.

In 2024-25, India imported Chinese merchandise worth $113.45 billion, a 11.5% jump from $101.73 billion imported the previous financial year. The data showed India’s imports from China registered a robust double-digit growth while Indian exports to the country contracted, leading to huge trade deficit of $99.2 billion.

At least two officials dealing with trade matters expressed concern that the US’ huge retaliatory tariff on Chinese goods could see US-bound shipments diverting to other markets, including India, either directly or through a third country. The government has set up an import monitoring mechanism to take prompt and timely action against such dumping, they added, requesting anonymity. Besides China, imports from some of the 10 ASEAN countries would be under vigil as Chinese goods could use the bloc’s free trade agreement with India to indirectly access the Indian market.

Reacting to Beijing’s move banning exports of critical minerals, heavy rare earth metals and rare earth magnets, the Trump administration on April 15 imposed 245% duty on Chinese imports. A White House fact-sheet on Tuesday alleged that China’s action aims to “choke off supplies” of components central to its industries, hence “China now faces up to a 245% tariff on imports to the United States as a result of its retaliatory actions”.

Beijing has signalled its intention to address India’s concerns about a growing trade deficit, the officials said. Hindustan Times reported on April 12 that Beijing has informally approached India with ways to address the latter’s concerns on the trade deficit though higher imports of Indian goods by removing tariff and non-tariff barriers.

According to the Global Trade Research Initiative (GTRI) founder Ajay Srivastava, India’s rising trade deficit with China hit a “record gap” that reflects deeper structural dependencies, not just trade imbalances. He said Chinese imports were driven by rising demand for electronics, EV batteries, solar cells, and key industrial inputs — sectors where Chinese products dominate Indian supply chains. “China is India’s top supplier in all eight major industrial product categories. The PLI schemes are fuelling import growth due to their heavy reliance on imported components,” he said, referring to the production linked incentive scheme India has used to good effect to boost manufacturing.

“What’s more alarming is that India’s exports to China fell 14.5%, dipping to $14.2 billion—now lower than they were in FY2014, when the rupee was significantly stronger. This signals more than a trade issue; it’s a competitiveness crisis. These numbers are a wake-up call: India 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,” he added.

India has witnessed a rising trade deficit with China for years, according to government data. In the pre-Covid period , in 2019-20, India’s trade deficit with China was $48.65 billion. It fell marginally to $44 billion in 2020-21 due to the global economic slowdown. Thereafter, the deficit rose consistently. India’s trade deficit with China was $73.31 billion in 2021-22, $83.2 billion in 2022-23 and $85.08 billion in 2023-24, the data showed.

Hindustan Times reported on February 24 that India’s goods imports from China in FY25 would surpass the record of $101.73 billion seen in 2023-24. Key imports from China include electronic components, computer hardware, telecom instruments, dairy machinery, organic chemicals, electronic instruments, electrical machinery, plastic raw materials and pharmaceutical ingredients. India exports iron ore, marine products, petroleum products, organic chemicals, spices, castor oil and telecom equipment to China.