China accounts for at least 80% of India’s imports across 71 tariff lines in 2025-26: Report
A report by the Koan Advisory Group, in partnership with the Institute of Chinese Studies, found that China accounted for at least 80% of India's imports across 71 tariff lines (at the 8-digit Harmonized System classification level) in 2025-26.
Of these 71 lines, 46 crossed the 80% China-dependence threshold only after 2018-19, indicating a rising concentration of import reliance on China over time.
The report focuses on HS Chapter 85 (electrical machinery and electronic equipment), which includes semiconductor devices and lithium-ion batteries central to India's industrial and strategic supply chains.
China remained India's largest source of semiconductor imports in 2025-26, supplying 48.9% of the total — ahead of Singapore (8.4%), Indonesia (7.5%) and Vietnam (6.6%) — though this share declined from around 64% in 2024-25.
India's trade deficit with China stood at USD 112.1 billion in 2025-26, its largest bilateral trade deficit, with electrical machinery and electronic equipment alone accounting for USD 43.1 billion (about 38%) of that gap.
Harmonized System (HS) Classification and Tariff-Line Concentration
The Harmonized System (HS) is an internationally standardised nomenclature, maintained by the World Customs Organization, for classifying traded goods using numeric codes — 6-digit codes are internationally uniform, while countries add further digits (India uses 8-digit codes) for national tariff and trade-data purposes. Measuring the share of a single supplier country at this granular 8-digit "tariff line" level — rather than at the broader chapter or heading level — reveals import-source concentration that aggregate trade statistics can mask.
Key Details
- HS codes: 6-digit international core, extended nationally (India: 8-digit ITC-HS classification).
- HS Chapter 85 covers electrical machinery, electronic equipment and parts — the chapter examined in this report.
- A "tariff line" crossing an 80% single-country-supply threshold is used by trade analysts as a proxy for import-dependence risk.
The report's 71-tariff-line, 80%-threshold methodology is precisely this kind of granular concentration analysis, and it shows that dependence deepened specifically after 2018-19 for most of the flagged lines.
India Semiconductor Mission and the PLI Scheme for Electronics
The India Semiconductor Mission (ISM), set up in 2021 as an independent business division within the Digital India Corporation, drives India's strategy for building domestic semiconductor design, fabrication and display-manufacturing capacity. It works alongside the Production Linked Incentive (PLI) Scheme for large-scale electronics manufacturing, under which a semiconductor-specific PLI component (~₹76,000 crore, roughly USD 10 billion, launched December 2021) was created — the government's largest single-industry incentive commitment — aimed at reducing import dependence of the kind highlighted in this report.
Key Details
- India Semiconductor Mission: established 2021, housed within Digital India Corporation, under the Ministry of Electronics and Information Technology (MeitY).
- Semiconductor PLI outlay: ~₹76,000 crore (~USD 10 billion), launched December 2021.
- Several semiconductor/display fabrication and packaging units have since been approved under ISM across states including Gujarat, Odisha, Punjab and Andhra Pradesh.
Despite these import-substitution schemes, China's semiconductor import share (48.9% in 2025-26) remains the largest single-country share, illustrating the gap between policy intent and current supply-chain reality — even as the share has declined from ~64% the previous year.
Bilateral Trade Deficit as a Balance-of-Payments Indicator
A trade deficit occurs when a country's imports from a partner exceed its exports to that partner. India's trade deficit with China — its largest bilateral deficit with any single country — reflects India's continued reliance on Chinese intermediate and capital goods (especially electronics and machinery) even as India runs trade surpluses or smaller deficits with many other partners. Persistent, large bilateral deficits in strategically sensitive sectors (electronics, active pharmaceutical ingredients, capital goods) are tracked by the Ministry of Commerce and flagged as both an economic and a supply-chain-security concern.
Key Details
- India-China trade deficit, 2025-26: USD 112.1 billion — India's single largest bilateral trade deficit.
- Electrical machinery and electronic equipment: USD 43.1 billion, ~38% of the total deficit with China.
- Bilateral trade deficits are one component of India's overall current account balance, alongside services trade and remittances.
The scale of the electronics-driven deficit is the economic backdrop against which the 71-tariff-line, 80%-dependence finding is being read as a strategic vulnerability, not merely a trade statistic.
Supply-Chain Diversification: The "China+1" Policy Response
"China+1" refers to a diversification strategy — pursued by governments and firms — of sourcing manufacturing and components from an additional country alongside (or instead of) China, to reduce over-concentration risk. India's PLI schemes across 14 sectors, free trade agreement negotiations, and targeted incentives for electronics component manufacturing are examples of policy tools used to encourage such diversification, though the report's finding of rising (not falling) tariff-line concentration since 2018-19 suggests limited success so far in the electronics sector specifically.
Key Details
- PLI framework: launched 2020, spans 14 sectors including electronics/IT hardware, semiconductors, telecom, pharmaceuticals.
- Alternative semiconductor/electronics sourcing hubs cited in the report: Singapore, Indonesia, Vietnam.
- Targeted, product-specific localisation (rather than broad tariff measures) is generally recommended by trade analysts for reducing concentration in strategic input categories.
The report's core policy recommendation — targeted localisation of core components rather than blanket import curbs — reflects the broader China+1/PLI diversification debate playing out across India's electronics and semiconductor policy.
- Tariff lines with ≥80% China import share (2025-26): 71 (at 8-digit HS code level); 46 of these crossed the threshold only after 2018-19.
- China's share of India's semiconductor imports, 2025-26: 48.9% (down from ~64% in 2024-25); Singapore 8.4%, Indonesia 7.5%, Vietnam 6.6%.
- India-China trade deficit, 2025-26: USD 112.1 billion — India's largest bilateral trade deficit.
- Electrical machinery and electronic equipment share of the deficit: USD 43.1 billion (~38%).
- Semiconductor PLI outlay: ~₹76,000 crore (~USD 10 billion), launched December 2021 under the India Semiconductor Mission.
- Report focus: HS Chapter 85 (electrical machinery and electronic equipment, including semiconductors and lithium-ion batteries).