India-China Economic Relations
The Dependency Paradox
Despite political tensions and security restrictions on Chinese FDI since 2020, India-China trade has grown significantly. India's trade deficit with China widened to approximately $99 billion in 2024-25, making China India's largest trade partner by imports. India imports critical goods including electronic components, APIs (active pharmaceutical ingredients), capital goods, and rare earth elements from China. This dependency creates a strategic dilemma: India needs Chinese supply chains for its own manufacturing goals (electronics, EVs, solar) yet seeks to restrict Chinese equity ownership in Indian firms for security reasons.
- India-China trade deficit: ~$99 billion in 2024-25 (China is India's top import source)
- Key Indian imports from China: electronics, APIs, machinery, rare earths, solar panels
- China's share of India's imports: ~15% (largest single country source)
- Despite restrictions under Press Note 3, Chinese FDI proposals are still received and selectively approved
- India's "China+1" strategy: positioning itself as an alternative manufacturing hub for global firms seeking to de-risk from China
● Tracked since March 11, 2026 · last seen May 04, 2026 · updates as the daily brief publishes