India's Trade Dynamics: A Record Deficit with China and Growing Ties with the US

India maintained its position as a key trading partner with the US, achieving bilateral trade worth USD 131.84 billion in 2024-25. Meanwhile, its trade deficit with China widened to USD 99.2 billion, driven by rising imports. The US trade surplus with India improved, alongside ongoing negotiations to boost future commerce.

For the fourth consecutive year, the United States has retained its position as India's largest trading partner, with bilateral trade figures reaching USD 131.84 billion in the fiscal year 2024-25. This achievement comes amid growing concerns over India's widening trade deficit with China, which reached a record USD 99.2 billion, according to recent government data.

India's exports to China saw a 14.5% contraction, dropping to USD 14.25 billion, while imports from China surged by 11.52% to USD 113.45 billion. The Global Trade Research Initiative (GTRI) attributes this deficit to structural dependencies and China's dominance in key industrial sectors such as electronics, EV batteries, and solar cells. India's trade data with China reflects not only trade imbalances but also deeper competitiveness issues, demanding urgent reforms in domestic manufacturing.

Conversely, India's trade surplus with the United States increased to USD 41.18 billion, with exports to the US rising by 11.6%. As both countries are negotiating a trade agreement, there is optimism for bilateral commerce to reach USD 500 billion by 2030. Meanwhile, the United Arab Emirates remains India's third-largest trading partner.

(With inputs from agencies.)