China becomes India's top trading partner, widening gap prompts talks

New Delhi, September 12 – In a significant shift, China has eclipsed the United States to become India’s largest trading partner, a development that will dominate the upcoming bilateral conversation between Prime Minister Narendra Modi and President Xi Jinping. Bilateral merchandise trade rose 18.3 percent to $151.10 billion in 2025‑26, while the trade deficit expanded to $112.16 billion, up from $99.21 billion the previous year.

India’s exports to China surged 36.6 percent, reaching $19.47 billion, but imports grew even faster, climbing 16.0 percent to $131.63 billion. The resulting imbalance has drawn attention from policymakers on both sides of the table.

The trade relationship is heavily weighted toward imports of essential industrial inputs. GTRI data shows that China supplies roughly 43 percent of India’s electronic components and 40 percent of its machinery and computer imports, accounting for about two‑thirds of the overall import value.

Beyond consumer goods, India depends on China for more than 40 percent of six critical minerals required for renewable‑energy projects, electric‑vehicle batteries and defence manufacturing. Any interruption in these supplies could jeopardise key strategic sectors.

During the talks, India is expected to press for measures that reduce structural imbalances, while China is likely to seek greater ease in India’s investment climate to expand its corporate footprint in the country.