India’s trade dynamics witnessed a significant shift in the financial year 2025–26, with China overtaking the United States to become the country’s largest trading partner. This development reflects changing global economic patterns and India’s continued reliance on Chinese imports, even as exports show notable growth.
China Surpasses US in Bilateral Trade
According to official data, India’s total trade with China reached USD 151.1 billion in FY26. This marks a return to China’s position as India’s top trading partner, a role it previously held between 2013–14 and 2017–18, and again in 2020–21. The United States, which had maintained the top spot for four consecutive years until 2024–25, has now moved to second place.
Rising Imports Drive Trade Imbalance
A key factor behind China’s dominance is the surge in imports. India’s imports from China increased by 16 per cent to USD 131.63 billion, while exports rose sharply by 36.66 per cent to USD 19.47 billion. Despite the growth in exports, the trade deficit widened significantly, reaching an all-time high of USD 112.6 billion, up from USD 99.2 billion in the previous fiscal year. This highlights India’s continued dependence on Chinese goods, particularly in sectors such as electronics, machinery, and raw materials.
India-US Trade Shows Moderate Growth
Trade with the United States displayed moderate expansion during FY26. India’s exports to the US grew marginally by 0.92 per cent to USD 87.3 billion, while imports rose by 15.95 per cent to USD 52.9 billion. Consequently, India’s trade surplus with the US declined to USD 34.4 billion from USD 40.89 billion in FY25, indicating a narrowing advantage in bilateral trade.
Important Facts
- China became India’s largest trading partner in FY26 with trade worth USD 151.1 billion.
- India’s trade deficit with China reached a record USD 112.6 billion.
- The United States was India’s top trading partner from FY22 to FY25.
- Trade deficit occurs when imports exceed exports in bilateral trade.
Trends in Other Trade Partnerships
India’s export performance varied across partners. Positive export growth was recorded with countries such as the UAE, Germany, Brazil, and Vietnam. However, exports declined to markets including the Netherlands, the UK, and Bangladesh. On the import side, growth was seen from nations like Saudi Arabia, Japan, and Germany, while imports from Russia, Iraq, and Indonesia registered a decline. These trends indicate a shifting and complex global trade environment for India.