China has become India’s largest trading partner in the 2025–26 fiscal year, with two-way trade reaching $151.1 billion. (India’s fiscal year extends from April 1, 2025 through March 31, 2026). This shift ends a four year period when the U.S. stood as India’s largest trading partner.
The trade is very unbalanced: For the 2025-2026 fiscal year, India’s exports to China rose to $19.47 billion (an increase of 37% from the previous fiscal year), while India’s imports from China rose to $132.6 billion (a 16% increase). For the 2025-2026 fiscal year, India’s trade deficit with China is a stunning $113.13 billion.
The trade data shows two unexpected developments: first, the general impression created by the mainstream media is that India would trade very little with its putative enemy, China. But that false image does not govern the two countries’ economic relations.
Second, India has a “Make In India” program, to increase its production of goods manufactured at home, which it launched in 2014. But to implement the program, India did not have a sufficient base of fundamental goods to make the program work at the level India thought most advantageous, so it decided to turn to China for China to produce a base level of mostly capital, as well as some consumer goods.
