Xi Jinping’s Delhi visit comes as bilateral trade stands at $127.7 billion, with India’s deficit with China widening to nearly $100 billion
Chinese President Xi Jinping has arrived in New Delhi to attend the 18th Brics summit, with Prime Minister Narendra Modi scheduled to hold a bilateral meeting with him later on Saturday. As the two leaders prepare to meet, trade is one of the key areas shaping the India-China economic relationship.
Bilateral trade between India and China rose 7.9 per cent to $127.7 billion in 2025-26 from $118.39 billion in the previous financial year, according to government data.
But the increase in trade has also come with a widening imbalance. India’s trade deficit with China rose to $99.19 billion in 2025-26, compared with about $85 billion in 2024-25.
The deficit has expanded steadily over the past few years. It stood at $83.2 billion in 2023-24, $73.3 billion in 2022-23 and $44 billion in 2021-22.
India’s exports to China rise
There has been some improvement in India’s exports to China. Exports rose 36.62 per cent to $19.47 billion in 2025-26 from $14.25 billion in 2024-25. Imports, however, were much larger and increased 16 per cent to $131.62 billion from $113.44 billion.
China accounted for around 17 per cent of India’s total merchandise imports in 2025-26, compared with 15.7 per cent a year earlier.
More from BusinessOn the export side, China’s share rose to 4.4 per cent from 3.2 per cent. The numbers show the scale of the relationship, but also the gap between what India sells to China and what it buys from the country.
Why India depends on Chinese supplies
A large part of India’s imports from China consists of industrial goods and inputs used by domestic manufacturers.
According to the Global Trade Research Initiative, around 98.5 per cent of India’s imports from China in 2025 were industrial products, while agriculture, fuels, and gems and jewellery together accounted for less than 1.5 per cent.
Electronics, machinery, computers and organic chemicals alone accounted for about $82.6 billion, or roughly 66 per cent of India’s imports from China.
China supplies around 43 per cent of India’s electronics imports, 40 per cent of machinery and computer imports and 44 per cent of organic chemical imports, according to GTRI.
These include components and intermediate goods used in Indian manufacturing. The Commerce Ministry has also pointed to imports such as auto components, electronic parts and assemblies, mobile phone parts, machinery, machinery components and active pharmaceutical ingredients.
This means that reducing the trade deficit is not simply a matter of cutting imports. A large portion of the imports feed into India’s own manufacturing and export ecosystem.
Investment remains limited
Investment is another important part of the economic relationship.
India has received foreign direct investment of around $2.51 billion from China between April 2000 and March 2026.
India has retained restrictions on investments involving entities from countries sharing a land border with India. Even recent changes to foreign investment rules do not extend the relaxed norms to entities registered in China, Hong Kong and other land-border countries.
What the trade numbers mean for the Modi-Xi meeting
Xi’s visit comes as India and China seek to stabilise bilateral ties after years of tensions.
The latest trade figures underline a central economic challenge for India: bilateral commerce is large and growing, but the relationship remains heavily tilted towards Chinese goods and industrial inputs.
At the same time, there are signs of scope for expanding Indian exports. Yu Lu, vice president of the China Chamber of Commerce, told ANI that the outlook for India-China economic ties was a “very bright perspective” and said trade could increase following Xi’s visit and the Brics summit.
She also pointed to efforts to promote Indian products such as aquatic products and tea in the Chinese market.
(With inputs from agencies.)
