India-China trade just keeps growing – even if New Delhi would really rather it didn’t

India’s bilateral trade with China totalled US$118.4 billion over that period, with imports rising by 3.24 per cent to US$101.7 billion and exports increasing by 8.7 per cent to US$16.67 billion.

Trade between India and the US, by comparison, totalled US$118.3 billion in 2023-24.

China’s deep integration in global supply chains and its status as a “manufacturing behemoth” with highly developed industrial processes was a key reason for its emergence India’s largest trading partner, said Divya Murali, a research associate at the National University of Singapore’s Institute of South Asian Studies who was speaking in a personal capacity.

“[China] is unquestionably a critical part of global value and supply chains,” she said, adding that the country had been India’s top trading partner seven times over the past decade. The US most recently took the top spot in 2019-2020, 2021-22 and 2022-23.

Data from India’s commerce ministry shows the country’s main imports from China have remained mostly the same over the years, including electrical machinery and equipment, nuclear reactors, boilers, machinery and mechanical appliances and organic chemicals.

But Murali said India had realised the risk of putting all its eggs in one basket and, like other countries, was looking to decouple from China by signing more free trade agreements (FTAs).

India is also “seriously incentivising domestic manufacturing capabilities in critical areas like semiconductors and electric vehicles,” Murali said. “All of these take some time before they start bearing fruit.”

She said India’s decoupling efforts were spurred on by both geopolitical tensions and its unfavourable trade balance with China. According to official data, India posted a US$85 billion deficit in