China Reclaims Top Spot as India’s Largest Trading Partner
In a significant development, China has once again emerged as India’s biggest trading partner, ending a two-year period where the United States held the top position. According to data from the Global Trade Research Initiative (GTRI), India’s total trade with China stood at $118.4 billion in the financial year 2024, marking a rise over the previous year’s figures.
While India’s exports to China saw a modest increase of 8.7% to $16.67 billion, imports from the neighbouring country grew at a sharper rate of 3.24% to cross the $101 billion mark. Higher imports helped China displace the US, whose trade relations with India witnessed declines across both export and import categories. India exported goods worth $77.5 billion to the US in FY24, down 1.32% year-on-year, while imports contracted 20% to $40.8 billion.
A closer examination shows that India has grown increasingly reliant on Chinese imports for critical sectors like telecommunications, smartphones, pharmaceuticals and technology components. The country sourced nearly half of its telecom and smartphone part imports, worth $4.2 billion, from China. Similarly, three-fourths of laptop and PC imports, valued at $3.8 billion, originated from China. This dependency poses economic and strategic challenges for India going forward.
Over the past five years, India’s exports to China saw minimal fluctuations but imports ballooned by 45%. As a result, the trade deficit with China expanded sharply from $53.57 billion to $85.09 billion. In comparison, exports to the US rose nearly 50% alongside a more modest 14.7% growth in imports, helping narrow the deficit.
