India-China Trade Deficit Crosses $100 Billion In 9 Months As Imports Hit $125 Billion Despite 40% Export Surg

India’s trade with China is expanding at a fast pace in 2026, but the headline growth hides a familiar problem for New Delhi: exports are rising strongly, yet imports remain far larger. Data from China’s General Administration of Customs shows India’s exports to China rose 40.7% in January-September to $19.26 billion, while the bilateral trade deficit crossed $100 billion in just nine months.

India-China Trade Deficit Crosses $100 Billion In 9 Months

Total two-way trade during the first three quarters stood at $144.45 billion, up 25.4% from the same period earlier. India’s imports from China increased 23.3% to $125.19 billion. The deficit, at $105.93 billion, is now on course to exceed the previous annual record, keeping trade imbalance at the centre of economic discussions between the two countries.

The numbers show why the imbalance worries policymakers. India’s exports to China have already reached around last year’s full-year level, helped by shipments of seafood products, naphtha and printed circuit boards. Yet the export base remains small compared with imports. For every dollar of goods India sold to China during January-September, it bought more than six dollars’ worth from the country.

The widening gap has become a recurring issue in bilateral talks. It was also discussed during the meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping on the sidelines of the BRICS summit. India has repeatedly flagged the need for predictable market access for its companies and a more balanced trading relationship.

New Delhi does not expect trade with China to be perfectly even. China is a major supplier of raw materials, capital goods and industrial inputs used by Indian manufacturers. The concern is the scale and composition of imports. India continues to depend heavily on China for electronics, electrical machinery, chemicals, components, solar equipment, telecom gear and several intermediate goods.

India-China Trade Deficit: Why 40% Export Growth Has Failed To Narrow The Gap

The 40% growth in exports is significant because India has struggled for years to grow shipments to China beyond a narrow basket of commodities and raw materials. Higher exports of seafood, petroleum-linked products such as naphtha, and printed circuit boards suggest some diversification. Printed circuit boards are especially notable because India has been trying to deepen domestic electronics manufacturing.

Even so, the overall value of exports remains modest. China’s demand from India is still concentrated in select goods, while India’s demand from China is spread across sectors central to manufacturing and consumption. This makes the deficit structural rather than seasonal. A temporary rise in a few export categories may improve the numbers, but it does not immediately alter the underlying dependence.

The challenge is also linked to market access. Indian businesses have often raised concerns about non-tariff barriers, approvals, standards, and limited opportunities in the Chinese market. For India, the issue is not only selling more goods, but selling higher-value products and services where domestic firms can compete better.

Indicator	January-September 2026
Total India-China trade	$144.45 billion
India’s imports from China	$125.19 billion
India’s exports to China	$19.26 billion
Trade deficit	$105.93 billion

Supply chain risks add pressure on India

The trade deficit has gained sharper policy relevance because of supply chain risks. India is concerned about Chinese export controls in areas such as fertilisers and rare earths. Rare earth materials are important for electronics, electric vehicles, renewable energy equipment and defence-linked technologies. Any disruption can affect production planning and raise costs for Indian companies.

Fertiliser-related restrictions are also sensitive because they can affect farm input costs and supply security. India imports key fertiliser ingredients and chemicals from several countries, including China. Restrictions or delays in such sectors can quickly move from trade statistics to inflation, industrial production and food security concerns.

This is why recent official statements have focused not only on trade volumes, but also on supply chains. After the recent leaders’ meeting in New Delhi, India’s Ministry of External Affairs said both sides underlined the need to address concerns including structural trade imbalance, supply chain issues and facilitation of meaningful and predictable market access.

China’s Foreign Ministry also said the two sides should address each other’s economic and trade concerns in a balanced way and promote sound and steady development of trade relations. The language suggests both governments recognise the issue, though translating that into measurable change will require sector-level engagement and market-opening steps.

What this means for Indian business

For Indian industry, the China trade picture is mixed. Many manufacturers rely on Chinese inputs because of scale, price and availability. Cutting imports sharply is neither practical nor desirable in sectors where domestic capacity is still developing. At the same time, overdependence on one country creates exposure to policy changes, logistics disruptions and price shocks.

India’s policy response is likely to remain two-track. One track is to build domestic capacity through electronics manufacturing, chemicals, solar equipment, batteries and component ecosystems. The other is to seek better access for Indian exports in China, especially in food products, pharmaceuticals, engineering goods, information technology-enabled services and higher-value manufacturing.

The latest data therefore signals progress, but not relief. India is selling more to China than before, and some export categories show promise. However, imports continue to rise from a much larger base. Unless export growth broadens and India reduces dependence in critical sectors, the trade deficit will remain a central issue in economic ties with China.