India-China Trade: Growth, Imbalance, and Strategic Dynamics (2015-2025)
Between 2015 and 2025, India-China bilateral trade nearly doubled to $136 billion, with China as India’s largest trading partner. However, India’s trade deficit with China widened sharply to $99.2 billion due to a heavier reliance on Chinese finished goods and technology exports. Despite geopolitical tensions, cooperation continues in sectors like pharmaceuticals and agriculture, while India pursues policies to reduce dependency and diversify exports.
The economic relationship between India and China from 2015 to 2025 has been characterized by rapid growth and significant asymmetry. Bilateral trade surged from approximately $71.2 billion in 2015 to around $136 billion in 2025, driven by India's demand for electronics, machinery, and raw materials, alongside Chinese exports of high-value finished goods and technology. India primarily exports raw and semi-processed goods such as iron ore, pharmaceuticals, agricultural products, textiles, and petroleum products to China, while importing electrical machinery, industrial parts, plastics, fertilizers, and consumer goods. This has resulted in a steep increase of India’s trade deficit with China, growing from $65 billion to $99.2 billion over the decade, fueled by India's dependence on Chinese inputs critical to its industrial sectors.Geopolitical tensions, border disputes, and trade policy shifts have intermittently strained relations, causing India to impose import restrictions in sensitive sectors like telecommunications and defense, while promoting domestic manufacturing through initiatives like 'Make in India' and Production-Linked Incentives. Nonetheless, strategic cooperation persists in pharmaceuticals, renewable energy, and agriculture. Both nations engage in multilateral forums such as BRICS, SCO, and G20 to facilitate trade and manage frictions.While China continues to invest in Indian infrastructure, logistics, and fintech, Indian exports face challenges including limited diversification and price competitiveness. Emerging opportunities exist in semiconductors, green technology, and digital services, though political sensitivities and protectionism remain hurdles. The India-China economic relationship is marked by a complex mix of interdependence and rivalry, emphasizing the need for India to enhance value-added exports and reduce overreliance on Chinese finished goods to achieve a more balanced and sustainable trade partnership.
