The Crossbill News Desk
India's merchandise trade imbalance with China expanded sharply in June 2026, underscoring the continuing challenge of narrowing the gap despite a notable rise in exports to its largest trading partner. The widening deficit has renewed concerns over India's dependence on Chinese imports and the limited diversification of its export basket.
According to The Hindu, India's trade deficit with China surged to $15.3 billion in June, marking a 430% increase compared with the same month a year earlier. During the period, India's exports to China grew by 27.5% to reach $5.6 billion.
The report said that India's trade deficit with China for the current financial year is on course to exceed last year's $116 billion, with the gap already touching $67 billion. Imports from China reached a record $79.41 billion during the first half of 2026-27.
At the same time, India's exports to China also registered robust growth, rising 37.2% to $12.31 billion during the first half of the financial year.
Despite the increase in exports, policymakers continue to express concern over the composition of India's shipments to China, which remain concentrated in relatively low value-added goods. Last year, NITI Aayog CEO B.V.R. Subrahmanyam reportedly said, “If you are not able to sell much to China, it is pointless, because it’s an 18-trillion-dollar economy.”
While his remarks advocated greater trade engagement with China through a "widening basket of goods", India subsequently eased its policy stance by allowing Chinese-backed investments in the domestic market after an extended freeze.
Responding to concerns raised in India, Chinese embassy spokesperson Yu Jing said on X on Wednesday (July 14), “We welcome more premium Indian products into Chinese market, which is the world’s second-largest importer with 500 million middle-class consumers.” She added that “China has never deliberately pursued a trade surplus with India”.
Yu also said India's imports from China during the April-June quarter of 2026-27 stood at $30.8 billion.
India has long sought to increase exports of higher value-added products to China instead of relying largely on raw materials, although progress towards exporting more intermediary goods has been gradual.
Reiterating Beijing's position, Yu wrote, “China has never deliberately pursued a trade surplus with India.” She maintained that Chinese exports of electronic components, machinery and intermediate goods “support” India's manufacturing expansion, job creation and industrial upgradation.
Commerce ministry data shows that China remained India's largest trading partner in 2025-26.
In March last year, minister of state for commerce and industry Jitin Prasada informed the Lok Sabha that imports from China largely consisted of raw materials, intermediate goods and capital goods, including active pharmaceutical ingredients, auto components, electronic parts and assemblies, and mobile phone components, “which are used for making finished products which are also exported out of India”.
He referred to initiatives such as 'Make in India', 'Make in India 2.0', 'Atmanirbhar Bharat' and the Production Linked Incentive (PLI) scheme, which have been promoted since 2014 to strengthen domestic manufacturing, alongside measures to improve logistics and transportation.
Government data indicates that the PLI scheme has attracted investments of around Rs 1.6 lakh crore across 14 sectors by November 2025, increasing to Rs 2.16 lakh crore by February 2026. Introduced in 2020, the scheme is aimed at boosting domestic manufacturing through production-linked incentives.
Even as India attempts to reduce its dependence on Chinese imports, experts continue to point to non-tariff barriers, market access restrictions and quality standards that constrain Indian exports to China.
Recent restrictions imposed by China on imports of Indian rice and chilli, along with curbs on exports of rare earth minerals, have added to these challenges. India, on its part, has imposed anti-dumping duties on select Chinese products, including plastic machinery, as part of efforts to shield domestic manufacturers from low-cost imports.
According to The Hindu, India's trade deficit with China surged to $15.3 billion in June, marking a 430% increase compared with the same month a year earlier. During the period, India's exports to China grew by 27.5% to reach $5.6 billion.
The report said that India's trade deficit with China for the current financial year is on course to exceed last year's $116 billion, with the gap already touching $67 billion. Imports from China reached a record $79.41 billion during the first half of 2026-27.
At the same time, India's exports to China also registered robust growth, rising 37.2% to $12.31 billion during the first half of the financial year.
Despite the increase in exports, policymakers continue to express concern over the composition of India's shipments to China, which remain concentrated in relatively low value-added goods. Last year, NITI Aayog CEO B.V.R. Subrahmanyam reportedly said, “If you are not able to sell much to China, it is pointless, because it’s an 18-trillion-dollar economy.”
While his remarks advocated greater trade engagement with China through a "widening basket of goods", India subsequently eased its policy stance by allowing Chinese-backed investments in the domestic market after an extended freeze.
Responding to concerns raised in India, Chinese embassy spokesperson Yu Jing said on X on Wednesday (July 14), “We welcome more premium Indian products into Chinese market, which is the world’s second-largest importer with 500 million middle-class consumers.” She added that “China has never deliberately pursued a trade surplus with India”.
Yu also said India's imports from China during the April-June quarter of 2026-27 stood at $30.8 billion.
India has long sought to increase exports of higher value-added products to China instead of relying largely on raw materials, although progress towards exporting more intermediary goods has been gradual.
Reiterating Beijing's position, Yu wrote, “China has never deliberately pursued a trade surplus with India.” She maintained that Chinese exports of electronic components, machinery and intermediate goods “support” India's manufacturing expansion, job creation and industrial upgradation.
Commerce ministry data shows that China remained India's largest trading partner in 2025-26.
In March last year, minister of state for commerce and industry Jitin Prasada informed the Lok Sabha that imports from China largely consisted of raw materials, intermediate goods and capital goods, including active pharmaceutical ingredients, auto components, electronic parts and assemblies, and mobile phone components, “which are used for making finished products which are also exported out of India”.
He referred to initiatives such as 'Make in India', 'Make in India 2.0', 'Atmanirbhar Bharat' and the Production Linked Incentive (PLI) scheme, which have been promoted since 2014 to strengthen domestic manufacturing, alongside measures to improve logistics and transportation.
Government data indicates that the PLI scheme has attracted investments of around Rs 1.6 lakh crore across 14 sectors by November 2025, increasing to Rs 2.16 lakh crore by February 2026. Introduced in 2020, the scheme is aimed at boosting domestic manufacturing through production-linked incentives.
Even as India attempts to reduce its dependence on Chinese imports, experts continue to point to non-tariff barriers, market access restrictions and quality standards that constrain Indian exports to China.
Recent restrictions imposed by China on imports of Indian rice and chilli, along with curbs on exports of rare earth minerals, have added to these challenges. India, on its part, has imposed anti-dumping duties on select Chinese products, including plastic machinery, as part of efforts to shield domestic manufacturers from low-cost imports.
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