India’s imports from China soar to $80 billion in first half of 2026, exports up 37%
India-China two-way trade rose to $91.72 billion in the first six months of 2026, a 23.6% increase over the same period last year
Indian imports from China rose to approximately $79.4 billion, up about 21.8%, while Indian exports to China rose 37.2% to about $12.3 billion
India's trade deficit with China widened to roughly $67.1 billion for the half-year
Total bilateral trade for the half-year is on track to surpass the record full-year 2025 figure of $155.62 billion if the current pace continues
Chinese exports to India were concentrated in electrical and electronic equipment, telecom gear, semiconductors, lithium-ion batteries, industrial machinery and organic chemicals
India's Trade Deficit with China and Import Dependence
India's trade with China has been structurally lopsided for over a decade, with India running a persistent and growing deficit driven by imports of electronics, machinery, active pharmaceutical ingredients (APIs) and critical inputs, while Indian exports remain concentrated in raw materials and low-value-added goods.
Key Details
- India's trade deficit with China reached a record $99.2 billion in FY 2024-25 (imports of $113.5 billion against exports of $14.3 billion)
- Over 90% of India's rare earth magnets and metals are sourced from China; in FY 2024-25 India imported nearly 54,000 tonnes of rare earth magnets, of which about 93% came from China
- India does not have a Free Trade Agreement (FTA) with China; bilateral trade is governed largely under WTO Most Favoured Nation (MFN) terms and limited tariff concessions under the Asia Pacific Trade Agreement (APTA)
- India's policy approach favours "de-risking" through supply chain diversification (China Plus One) rather than deeper trade liberalisation with China
The widening deficit and record import figures for H1 2026 illustrate the continuing structural import dependence on China, even as exports show a sharper percentage rise off a much smaller base.
Critical Minerals and Rare Earth Export Controls
China dominates global processing of rare earth elements and critical minerals used in electronics, defence platforms and electric vehicles, and has used export licensing as a strategic lever.
Key Details
- China introduced rare earth export controls in April 2025 (days after US reciprocal tariff announcements) and escalated them in October 2025, requiring foreign companies to obtain a Chinese licence if products contain even trace amounts (0.1%) of Chinese-origin rare earths or related technology
- Rare earth and lithium-ion battery imports are explicitly among the categories driving India's import bill from China
- Shortages have already affected Indian electric vehicle production, illustrating the strategic risk embedded in the trade relationship
- India has since pursued domestic critical mineral exploration under the National Critical Mineral Mission and diversification of magnet and battery supply chains
The commodity composition of India's imports from China in H1 2026 (semiconductors, lithium-ion batteries, telecom gear) sits squarely within the categories most exposed to China's rare earth and critical mineral export control regime.
Balance of Payments and Current Account Implications
A widening bilateral trade deficit with a single large trading partner has implications for India's overall current account balance, even when India runs surpluses or narrower deficits with other regions.
Key Details
- India's overall merchandise trade deficit and current account deficit (CAD) are tracked and reported by the Reserve Bank of India (RBI) and the Ministry of Commerce (DGCI&S data)
- A structurally large deficit with one country can be partly offset by services exports and remittances in the overall Balance of Payments (BoP), but the bilateral goods deficit remains a distinct policy concern for import substitution and manufacturing (Make in India, PLI schemes) strategy
- China is one of India's largest trading partners by total two-way trade volume, alongside the United States and UAE
The H1 2026 figures, if the deficit trend continues for the full year, would push the bilateral deficit with China into new record territory, reinforcing the policy debate on reducing import dependence through domestic manufacturing incentives.
- H1 2026 bilateral trade: $91.72 billion (up 23.6% year-on-year)
- Indian imports from China (H1 2026): ~$79.4 billion (up ~21.8%)
- Indian exports to China (H1 2026): ~$12.3 billion (up 37.2%)
- H1 2026 trade deficit with China: ~$67.1 billion
- Full-year 2025 record bilateral trade: $155.62 billion
- FY 2024-25 full-year trade deficit with China: $99.2 billion (record)
- Share of Chinese-origin rare earth magnets in India's FY 2024-25 imports: ~93%