India's imports from China set to surpass $101B
What's the story
India's trade deficit with China is likely to widen further as the country's imports from its neighbor are expected to surpass a record $101.73 billion in FY25.
The projection is based on provisional government data showing a surge in Chinese imports and expected shipments till March 2025.
The first 10 months of the current fiscal year (April 2024-January 2025) have already seen cumulative Chinese imports touch $95.01 billion, a whopping 10.6% increase over the same period last year.
Import spike
January 2025 records significant surge in Chinese imports
January 2025 saw a significant increase in imports from China, amounting to $10.48 billion. This marks a year-on-year growth of over 17%.
However, even as imports are rising, India's exports to China contracted by 14.85% during April 2024-January 2025 as compared to the same period last fiscal.
The contraction was especially sharp in January 2025 at $483 million, down over 31% YoY.
Deficit increase
Trade deficit with China nears previous fiscal year's total
The trade deficit with China for the first 10 months of FY25 has hit $83.52 billion, nearly matching the total deficit of $85.06 billion for the entire fiscal year of 2023-24.
This imbalance is caused by India importing more goods from China than it exports to the country.
Major imports from China include electronic components, computer hardware, telecom instruments, dairy machinery, organic chemicals, electronic instruments, electrical machinery, plastic raw materials and pharmaceutical ingredients.
Import justification
'Make in India' initiative and trade balance
Defending the growth in imports, officials have said that most of the goods imported from China are raw materials/intermediary inputs that bolster the 'Make in India' initiative.
A senior commerce ministry official said, "Most goods imported from China are capital goods, intermediate goods and raw materials like active pharmaceutical ingredients, auto components, electronic parts and mobile phone components used for making finished products for exports."
Trade statistics
Overall merchandise exports and imports see growth
From April 2024 to January 2025, India's overall merchandise exports increased a modest 1.39% to $358.91 billion, while imports surged a more robust 7.43% to $601.9 billion.
This has widened the merchandise trade deficit to $242.99 billion from $206.29 billion in the same period last year.
The rupee's depreciation against the dollar is believed to have adversely affected India's trade balance, especially petroleum imports which rose 6.42% in the first 10 months of this fiscal year.