India’s trade gap with China is expected to grow further and may reach $106 billion in 2025, according to the Global Trade Research Initiative (GTRI). The estimate shows that India remains heavily dependent on Chinese imports, even though exports to China are slowly improving.
GTRI says India’s exports to China could rise to about $17.5 billion in 2025. This is better than the low point of $14.5 billion in 2023, after exports fell steadily from 2021. However, export levels are still much lower than earlier years and are not enough to reduce the overall trade gap.
Imports from China, on the other hand, are growing much faster. India’s imports are projected to reach nearly $123.5 billion in 2025, mainly due to strong demand for industrial and high-technology products. Because imports are rising much more than exports, the trade deficit has widened sharply from about $64.7 billion in 2021 to the projected level.
The report notes that India buys a narrow range of goods from China. Nearly 80 per cent of imports come from sectors such as electronics, machinery, chemicals, plastics, and engineering products. These include important items like mobile phone parts, semiconductors, laptops, solar panels, lithium-ion batteries, and other components needed for manufacturing and renewable energy.
While these imports help Indian industries run smoothly, they also show weaknesses in India’s supply chains. GTRI says India lacks enough domestic capacity in advanced manufacturing, forcing companies to depend on Chinese suppliers. Replacing these imports in the short term is difficult.
The government has recognised the concern. The Commerce and Industry Ministry has said the deficit is mainly due to imports of raw materials, intermediate goods, and capital equipment used by Indian industries. An inter-ministerial group is studying trade trends and ways to increase exports and reduce reliance on one country.
Although exports to China sometimes rise sharply in certain months due to products like naphtha and electronics, experts warn these gains are limited and short-lived.
GTRI concludes that without stronger manufacturing at home and more diversified exports, India’s trade imbalance with China will remain high in the coming years.
Also Read: SAT grants interim relief to Avadhut Sathe Trading Academy