Prof Navneet Gera
The Indian economy, recognised as one of the largest economies in the world is heavily dependent on China’s product across several product categories. This definitely raises a pertinent question regarding the factors responsible for large volume of imports from China to Indian market. What are the reasons for massive imports from China? Understanding these dynamics is relevant in the context of India’s mission for self-reliance (Atmanirbhar Bharat), which stresses upon strengthening domestic manufacturing capabilities and reducing over dependence on foreign suppliers. In this regard, it becomes essential to explore and examine the future policy direction and strategic outlook of trade authorities aimed at minimizing import dependence and enhancing domestic competitiveness.
At the same time, think tanks must consider and identify measures that can strengthen India’s export performance, particularly in the Chinese market. According to data available from TradeMap, India exported goods worth approximately USD 15 billion to China during 2024–25, whereas imports from China exceeded USD 108 billion, resulting in a substantial trade imbalance that has become a matter of policy concern and discussion among trade authorities and policymakers. In this context, it is important to analyse the composition of the export basket from India to China and, conversely, the range of products imported from China into India. Such an analysis can provide valuable insights into the structural nature of bilateral trade and highlight potential areas for export diversification and import substitution.
In 2024, India’s total exports to the world amounted to USD 441 billion, while imports reached USD 702 billion, resulting in a trade deficit of USD 261 billion. A substantial portion of this deficit is attributable to trade with China. India’s exports to China were valued at approximately USD 15 billion, whereas imports from China surged to USD 108 billion, leading to a bilateral trade deficit of about USD 93 billion. This large imbalance indicates the structural dependence of the Indian economy on Chinese manufacturing and intermediate goods. A closer examination of the product-wise composition of trade further illustrates the asymmetry in the bilateral trade relationship. India’s exports to China are largely concentrated in primary and resource-based commodities. Among the major export items are ores, slag and ash (Chapter 26) valued at USD 2.5 billion, followed by organic chemicals (Chapter 29) and mineral fuels (Chapter 27) at approximately USD 1.2 billion each. Other export categories include nuclear reactors, boilers and machinery (Chapter 84) and fish and crustaceans (Chapter 03) at about USD 1.1 billion each, along with animal and vegetable fats and oils (Chapter 15) valued at USD 0.85 billion, and electrical machinery and equipment (Chapter 85) amounting to USD 0.82 billion. This pattern clearly reflects that India’s exports to China are primarily low to medium value-added commodities, many of which are raw materials or semi-processed products.
In contrast, India’s imports from China are concentrated in high value-added manufacturing sectors, particularly capital goods, electronics, and intermediate industrial inputs. The most prominent import category is electrical machinery and equipment (Chapter 85), valued at around USD 36 billion, followed by nuclear reactors, boilers and machinery (Chapter 84) at approximately USD 24 billion. Other noteworthy imports include organic chemicals (Chapter 29) at around USD 11 billion, plastics and articles thereof (Chapter 39) at USD 6.1 billion, and iron and steel products (Chapters 72 and 73) amounting to USD 4.7 billion. This clearly indicates that India primarily imports technology-intensive and manufacturing-based goods, while exporting resource-based commodities, thereby reinforcing the structural trade deficit.
Further disaggregation of import data reveals the magnitude of India’s dependence on Chinese components and electronic goods. India imported telephone parts worth USD 6.8 billion, data processing machines valued at USD 4.7 billion, and electronic integrated circuits amounting to USD 6.5 billion from China. Additional imports include flat panel displays worth USD 1.2 billion, polyvinyl chloride (PVC) valued at USD 1.1 billion, and antibiotics and penicillin amounting to USD 1.5 billion. These figures demonstrate that China plays a dominant role in supplying critical intermediate inputs for India’s electronics, telecommunications, pharmaceutical, and manufacturing sectors.
This extensive dependence on Chinese imports raises important concerns regarding India’s domestic manufacturing capabilities, particularly after more than 75 years of economic development since independence. The trade pattern reflects a structural gap in technology-intensive manufacturing and component-level production within India. In particular, Chapter 84 (machinery and mechanical appliances) and Chapter 85 (electrical and electronic equipment) represent sectors where China has established strong global competitiveness.
Another important strategic initiative involves strengthening research and development (R&D), technology transfer, and industrial clusters to support high-value manufacturing. Investment in semiconductor manufacturing, electronics assembly, pharmaceutical ingredients, and specialty chemicals can reduce import dependence in the long run.
From a strategic perspective, India must prioritize the development of core competencies in high-value manufacturing sectors, especially in electronics, semiconductor components, industrial machinery, and precision engineering. Strengthening domestic production capacities in Chapters 84 and 85 is critical because these sectors not only contribute significantly to the trade deficit but also form the backbone of modern industrial ecosystems. India’s heavy reliance on imports in these categories indicates the need for strategic policy interventions to build domestic capabilities and reduce long-term dependence.
