Over the past decade, the economic interplay between India and China has expanded in both scale and sophistication, forging one of Asia’s most dynamic trade relationships. Between 2015 and 2025, bilateral trade nearly doubled, underscoring deep supply chain linkages spanning manufacturing, technology, and resources. Yet, the relationship remains imbalanced—India’s trade deficit has widened sharply as imports from China continue to outpace exports. Despite geopolitical tensions and pushbacks in sensitive sectors, cooperation endures across pharmaceuticals, agriculture, and infrastructure. TopNews Team examines the evolution, structure, and strategic future of India-China trade, charting a complex blend of competition and interdependence.

India-China Bilateral Trade: A Decade of Expansion

The decade from 2015 to 2025 has been transformative for India-China economic engagement. Based on consolidated data from OECD, OEC World, and Reuters, bilateral trade soared from around $71.2 billion in 2015 to an estimated $136 billion in 2025. This near-doubling occurred despite intermittent strains caused by shifting geopolitical realities, pandemic-era disruptions, and evolving trade policies.

China remained India’s largest trading partner through much of this period, while India continued to be China’s biggest trading counterpart in South Asia. A persistent asymmetry marked this growth: Chinese exports to India accelerated faster than Indian exports to China, enlarging the bilateral trade deficit.

Key Drivers of Growth:

China’s manufacturing expansion and technology transfer capabilities.

India’s swelling demand for electronics, machinery, and critical raw materials.

Chinese capital inflows into India’s infrastructure and technology companies.

India’s growing export of pharmaceuticals, minerals, and agricultural commodities to China.

Sectoral Structure: The Engines of Bilateral Trade

India-China trade is structured around sectoral asymmetry. India primarily ships raw and semi-processed goods, while China exports finished, high-value, and technology-centric products.

Indian Exports to China: Core Sectors

Data from IBEF and OEC World shows five primary export pillars for India:

Iron Ore and Minerals: Roughly 30 percent of exports consist of iron ore, copper, and other minerals critical to China’s infrastructure and manufacturing ecosystem.

Organic Chemicals and Pharmaceuticals: India’s competitive edge in APIs and organic chemical intermediates supports China’s pharmaceutical production.

Agricultural Products: Cotton, seafood, and agri-commodities remain core components, backed by China’s food security initiatives.

Textiles and Garments: Raw cotton and textile inputs feed into China’s export manufacturing chains.

Petroleum Products: Refined petroleum and derivatives reflect cyclical exports tied to oil prices and refinery capacity.

Chinese Exports to India: Technology-Heavy Composition

China’s exports are technologically advanced and highly diversified:

Electrical Machinery and Electronics: Representing over 27 percent of exports, led by household brands such as Xiaomi, Vivo, and OnePlus.

Mechanical Machinery and Industrial Parts: Rising demand from India’s engineering and automobile sectors has deepened China’s position in this segment.

Plastics and Chemicals: Fundamental to India’s industrial base across packaging, manufacturing, and construction.

Fertilizers: China remains a key chemical fertilizer supplier to Indian agriculture.

Medical and Optical Instruments: High-tech diagnostic and research equipment increasingly populate Indian institutions.

Consumer Goods: From toys to furniture, China retains dominance in price-sensitive segments.

India-China Trade Composition

Trade Imbalance: Structural Causes and Strategic Remedies

India’s trade deficit with China expanded from $65 billion in 2015 to a record $99.2 billion in 2025. The causes are rooted in structural economic differences.

Core Causes of the Deficit:

India’s heavy reliance on Chinese supplies of electronics, industrial machinery, and chemicals.

Limited diversification within India’s export mix.

China’s unmatched cost competitiveness and manufacturing scale.

The raw material–finished goods dichotomy defining bilateral trade.

Implications:

Strain on India’s foreign exchange reserves and trade balance.

Heightened strategic vulnerability due to dependence on essential Chinese imports like APIs and electronic components.

Policy Interventions:

Targeted import restrictions on sensitive sectors such as telecommunications and defense.

The “Make in India” and Production-Linked Incentive (PLI) schemes encouraging domestic manufacturing.

Diversification of export markets toward ASEAN, Europe, and Africa to mitigate dependence on China.

Geopolitical Dynamics and Recent Trade Adjustments

Between 2023 and 2025, border disputes, global supply chain realignments, and regulatory shifts have reshaped the trading landscape.

Recent Trends:

India tightened oversight in strategic sectors, reducing Chinese participation in telecom and digital infrastructure.

Chinese investors turned to indirect channels—venture capital and infrastructure partnerships—to maintain market presence.

Collaborations persisted in pharmaceuticals, renewable energy, and agriculture despite broader political strains.

Both nations have maintained a pragmatic balance between competition and cooperation, understanding the economic risks of complete decoupling.

Detailed Sectoral Review: Shifting Lines of Dependency

Iron Ore and Minerals:
China’s infrastructure and real estate expansion under its Belt and Road strategy drove strong demand for Indian resources, reinforcing this as a critical export corridor.

Pharmaceuticals and Chemicals:
India remains a global API powerhouse, but competition is intensifying as China builds self-sufficiency. This rivalry is set to define the next phase of Asia’s pharmaceutical trade.

Electronics and Machinery:
Roughly three-fourths of India’s smartphone market is now dominated by Chinese brands. While import substitution is gaining traction, dependency remains high in semiconductors and assembly components.

Agri-products and Food Commodities:
India’s cotton and seafood exports have found consistent demand in China’s urban food and textile chains. New sanitary standards have streamlined approvals, improving trade regularity.

Infrastructure and Investments:
Chinese foreign direct investment in India’s logistics, renewable energy, and fintech has complemented trade growth. Even amid tighter scrutiny, these capital links serve as stabilizers.

Strategic Cooperation and Policy Coordination

Despite recurring diplomatic tensions, both countries continue to engage across multilateral and bilateral channels to sustain commercial momentum.

Key Frameworks:

BRICS, SCO, and G20 engagements help coordinate trade simplification and financing reforms.

Bilateral working groups on customs and pharmaceutical certification help remove procedural frictions.

Emerging opportunities include semiconductors, green technology, and digital services, provided regulatory climates converge.

Strategic pragmatism has proven essential: both economies recognize that trade decoupling would carry steep economic costs.

Challenges and Opportunities Ahead

Persistent Challenges:

India’s dependence on Chinese inputs across critical industrial sectors.

Politically sensitive border dynamics affecting investment sentiment.

Rising protectionism and non-tariff barriers in both markets.

Emerging Opportunities:

India’s expanding IT and fintech exports to Chinese enterprises.

Cooperation on climate resilience technologies and drug research.

Long-term potential in shared infrastructure and green energy corridors.

Bottomline: Navigating a Complex Economic Partnership

The India-China trade narrative over the past decade exemplifies the dual reality of interdependence and rivalry. Trade volumes have grown impressively, but their imbalance has widened. For India, the path forward lies in calibrating industrial policy and fostering value-added exports; for China, the challenge will be sustaining its manufacturing dominance while managing regional sensitivities.

As global economic power continues to pivot toward Asia, the bilateral relationship between India and China will remain a cornerstone of regional stability and commercial opportunity—tempered by strategic caution yet propelled by economic necessity.