India's Trade Deficit with China Crosses US$100 Billion in Nine Months of 2026
Trade between India and China from January to September 2026 rose by 25.4% to US$144.45 billion, as per China's customs data for the calendar year.
India's imports from China rose by 23.3% to US$125.19 billion in these nine months.
This means India sold only about US$19.26 billion of goods to China in the same period.
So India's trade deficit (the gap between what India buys and what it sells) with China crossed US$100 billion, at about US$105.9 billion, in just nine months.
For comparison, in the first half of 2026 (January to June), the deficit was about US$67.1 billion. India's imports from China were US$79.41 billion and its exports were US$12.31 billion.
India buys mainly inputs from China: electronic parts, mobile phone parts, machinery, chemicals, solar equipment and medicine raw materials (APIs). Many Indian factories depend on these inputs.
India-China Trade Deficit: Structure and Causes
India's trade deficit with China is the gap between the value of goods India imports from China and the value of goods it exports to China. China is one of India's largest trading partners, but trade runs mostly one way. India buys large amounts of factory inputs and finished electronics from China and sells far less in return, mainly raw materials like iron ore, some chemicals and marine products. This gap is the largest deficit India has with any single country.
The January to September 2026 figures show the gap is still growing fast, with the deficit crossing US$100 billion in only nine months. Imports grew strongly because Indian factories making phones, electronics and medicines still rely on Chinese parts. Even though exports to China also grew, they started from a very small base, so the gap kept widening.
Trade Remedies: Safeguard Measures, Anti-Dumping, and Countervailing Duties
Trade remedies are special, temporary duties or limits on imports that World Trade Organization (WTO) rules allow a country to use to protect its own industry. There are three types. Anti-dumping duty is used when foreign goods are sold at unfairly low prices. Countervailing duty is used when foreign goods are cheap because their government gave subsidies. Safeguard duty is used when a sudden flood of imports hurts local industry, even if the trade is fair.
When imports from China rise this fast, Indian industries often ask for anti-dumping duties. These duties can protect specific sectors, like steel or chemicals, from very cheap imports. But they cannot fix the whole deficit, because most imports from China are inputs that Indian factories actually need.
Foreign Direct Investment (FDI): Concepts and India's Policy Framework
Foreign Direct Investment (FDI) is money a foreign company or person puts into a business in another country to own a lasting share and have a say in running it. India allows FDI through two routes: the automatic route (no prior government approval needed) and the government route (prior approval needed). Since April 2020, investment from countries that share a land border with India, including China, has needed government approval.
One way to reduce a trade deficit is to make the imported goods in India. Some experts argue that allowing Chinese firms to invest and build factories in India, with safeguards, can help shift production of parts here. The 2026 easing of FDI rules for land-border countries is linked to this debate about reducing import dependence.
- India-China trade, January to September 2026: US$144.45 billion, up 25.4%
- India's imports from China, January to September 2026: US$125.19 billion, up 23.3%
- India's exports to China, January to September 2026: about US$19.26 billion
- India's trade deficit with China, January to September 2026: about US$105.9 billion (crossed US$100 billion)
- First half of 2026: imports US$79.41 billion, exports US$12.31 billion, deficit about US$67.1 billion
- 2025-26 (Indian fiscal year): imports from China about US$131.62 billion; exports to China about US$19.47 billion
- Trade remedies in India: DGTR recommends, Ministry of Finance imposes; Customs Tariff Act, 1975 (Sections 8B, 9, 9A)
- Press Note 3 (2020): government approval for FDI from land-border countries; eased by Press Note 2 (2026), effective 2 May 2026