India-China trade: Here’s a look at the numbers ahead of Xi-Modi meet at BRICS Summit in Delhi
India-China bilateral trade figures were widely discussed ahead of a bilateral meeting between the Indian and Chinese heads of state on the sidelines of the BRICS Summit in New Delhi.
China emerged as India's largest trading partner in FY 2025-26, with bilateral trade of about $151.1 billion, overtaking the United States, which had held the top position for several preceding years.
India's imports from China rose to about $131.6 billion while exports to China stood at about $19.5 billion, producing a trade deficit of roughly $112 billion — among the widest India runs with any single trading partner.
The trade figures form part of the broader backdrop to the bilateral meeting, alongside discussions on border management and the boundary question.
Balance of Trade and the "Mirror Statistics" Problem
Balance of Trade is the difference between a country's export and import values with a partner over a period; a deficit means imports exceed exports. India's trade data with China is compiled by the Directorate General of Commercial Intelligence and Statistics (DGCI&S, Kolkata) on the import/export side, while China separately reports its own trade data — and the two rarely match exactly, a well-documented phenomenon called the "mirror statistics" problem.
Key Details
- China's recorded exports to India have historically exceeded India's recorded imports from China by a wide margin — the discrepancy has ranged from roughly $12 billion (2022) to about $19 billion in more recent years
- Explanations include differing valuation conventions (FOB — Free on Board — versus CIF — Cost, Insurance and Freight), differences in how re-exports via third countries (e.g., Hong Kong) are attributed, and under-invoicing by importers to reduce customs duty liability
- India's Ministry of Commerce has periodically published bilateral discrepancy studies (e.g., a formal DGCI&S report) to explain and narrow this reporting gap
The precise trade and deficit numbers being cited ahead of the summit are themselves a product of one national data system among at least two divergent ones — a nuance relevant when different reports appear to disagree on India-China trade values.
Press Note 3 (2020) — FDI Screening for Bordering Countries
Press Note 3 of 2020, issued by the Department for Promotion of Industry and Internal Trade (DPIIT) on 17 April 2020, requires any investment from an entity based in — or with a beneficial owner based in — a country sharing a land border with India to go through the government approval route rather than the automatic route, regardless of sector.
The asymmetry in the relationship is stark — trade with China has deepened to record levels even as investment flows remain tightly restricted, illustrating that India's economic engagement with China operates very differently on the trade side versus the capital/investment side.
The Special Representatives Mechanism and the Border Backdrop to Trade Talks
Trade and boundary issues are handled through entirely separate institutional tracks: trade figures are a Commerce Ministry/DGCI&S matter, while the boundary dispute is addressed through the Special Representatives (SR) mechanism, a bilateral channel distinct from routine diplomatic or trade negotiations.
Key Details
- The SR mechanism was constituted in 2003 to explore, from an overall political perspective, a framework for a boundary settlement between India and China
- Following the 2020 Galwan Valley clashes, high-level engagement continued through this and other channels; an October 2024 disengagement agreement addressed the remaining friction points in the Depsang and Demchok areas of eastern Ladakh
- The current Special Representatives are India's National Security Adviser and China's Foreign Minister; recent rounds (including a 2025 meeting) have moved beyond patrolling arrangements toward discussions on boundary delimitation
The bilateral meeting on the BRICS sidelines sits at the intersection of these two separate tracks — record trade volumes and a still-unresolved boundary question — which is why trade normalisation and border stability are typically discussed as linked but distinct agenda items.
- India-China bilateral trade, FY 2025-26: approximately $151.1 billion (exports ~$19.5 billion, imports ~$131.6 billion)
- Trade deficit with China, FY 2025-26: approximately $112 billion, the widest India runs with any single trading partner
- China overtook the United States to become India's largest trading partner in FY 2025-26 after the US held the top spot for the preceding several years
- India-China trade data discrepancy (mirror statistics gap): has ranged from roughly $12 billion (2022) to about $19 billion in recent years
- Press Note 3 (2020): mandates government-route approval for FDI from any country sharing a land border with India, effective 17 April 2020
- Special Representatives mechanism on the India-China boundary question: established 2003; October 2024 agreement resolved disengagement at Depsang and Demchok