India - China: Trump Tariff Impact; India’s Trade Deficit Surges to a Record $99.2 Billion
STORIES, ANALYSES, EXPERT VIEWS
While the US continues to be India’s top export destination, China remains the top source of India’s imports.
As per provisional data released by the commerce ministry on India’s foreign trade, China remained India’s top import source in 2024-25 with imports worth $113.46 billion. This marked an 11.5% increase over $101.74 billion worth of imports from China in FY24.
Meanwhile, India’s exports to China fell by 14.5% in FY25 to $ 14.25 billion from $ 16.67 billion in FY24. This took India’s trade deficit with China to a record $99.2 billion last fiscal.
The data is significant on two counts according to Business Today. “First, India is hopeful of a competitive advantage vis-à-vis China when it comes to exports to the US following the levy of reciprocal tariffs…Second, India is already concerned about possible dumping of goods from like China, Vietnam and Indonesia due to the reciprocal trade tensions and rising US costs. An inter-ministerial committee for import surge monitoring has been set up….”
Experts note that the staggering trade deficit with China is a cause for concern. China is India’s top supplier in all eight major industrial product categories. The PLI schemes are fueling import growth due to their heavy reliance on imported components. India needs to fix its internal manufacturing gaps and invest in deep industrial capabilities.
The positive: Chinese companies agree to minority stakes: On the positive side, Chinese companies have become more amenable to abiding by Indian conditions for expanding in the country.
This includes retaining only a minority stake in joint ventures, something they weren't keen on, but have been persuaded to do amid the US' escalating tariffs. If Chinese firms get shut out of that market, a presence in India will be important. New Delhi had turned cold to investments from across the Great Wall after border violence erupted in 2020.
China dominates critical minerals supply chain
Other than the trade imbalance, New Delhi is aware that China accounted for nearly a third of the share in the global supply chain of critical minerals valued at $450 billion in 2023, holding nearly 60 percent share in processed mineral exports of $14 billion, according to a Moneycontrol analysis of data from UN COMTRADE.
While the country was only the third largest exporter of critical raw materials like lithium, cobalt and graphite, it was the largest exporter of processed minerals with a 58.7 percent share in global exports in 2023. Chile was a distant second at 7.1 percent.
India slips spots every stage of the network: India has also been trying to carve out its space in the critical minerals supply chain, but analysis shows that it works rather as an importer of finished goods than as an exporter of intermediary material.
India’s position in critical mineral exports slips with each step of the supply chain. While India is the ninth largest exporter of raw material, it ranked 13th in processed mineral imports and 21st in supply of battery materials.
India was also the eighth largest exporter of battery packs, but 14th largest in battery materials.
