China Tops US as India's Largest Trade Partner; Deficit Widens to

In FY26, China became India's largest trading partner with total trade reaching USD 151.1 billion, surpassing the US. However, this was accompanied by a significant widening of the trade deficit with China to USD 112.16 billion.

This development signifies a shift in India's global trade dynamics and raises concerns about import dependence, particularly from China. While increased trade volume can be positive, a ballooning trade deficit can put pressure on the Indian Rupee and impact domestic industries.

Sectors heavily reliant on imports from China, such as electronics, machinery, and chemicals, might see continued cost benefits but also face potential supply chain risks. Domestic manufacturing companies could face increased competition. Logistics and shipping companies might benefit from higher trade volumes.

Traders should monitor government responses to the widening trade deficit, including potential import restrictions or incentives for domestic manufacturing. The performance of the Indian Rupee against the US Dollar and Chinese Yuan will also be a key indicator.

• •India's trade with China reached USD 151.1 billion in 2025-26, making it the largest partner.
• •The trade deficit with China widened significantly to USD 112.16 billion.
• •The US was previously the top partner for four years.
• •India's exports to China saw substantial growth, while imports also increased.
• •Risk flag: Further widening of trade deficit