India-China trade jumps 29% to $91.76 billion, China overtakes US as top partner

NEW DELHI: India’s bilateral trade with China surged nearly 29 per cent year-on-year to $91.76 billion in the first half of the financial year 2026-27, making Beijing New Delhi’s largest trading partner and overtaking the United States, according to commerce ministry data. The significant jump in two-way commerce comes as India signals efforts to rebuild bilateral ties with its northern neighbour.

During the April-September period, India’s exports to China grew by 36 per cent to $11.41 billion, up from $8.38 billion in the corresponding period of the previous fiscal. However, imports from China expanded at a faster pace, rising 27.82 per cent to $80.34 billion from $62.86 billion. Consequently, India’s trade deficit with China widened to $68.93 billion, compared to $54.06 billion a year earlier. Broader calendar-year data from China’s customs administration for January-September 2026 indicates the deficit has already crossed $100 billion, reaching $105.93 billion.

Meanwhile, India’s trade with the US also recorded robust growth, rising 16.5 per cent to $83.14 billion in the first six months of FY27. Exports to the US increased 11.11 per cent to $50.81 billion, while imports climbed 25.98 per cent to $32.32 billion. Although the US remained India’s largest merchandise export destination, the faster growth in imports narrowed India’s trade surplus with Washington to $18.49 billion from $20.07 billion.

On the broader front, cumulative merchandise exports rose 18.51 per cent to $259.89 billion during April-September, while imports increased 16.31 per cent to $437.53 billion. This pushed the overall merchandise trade deficit to $177.64 billion, up from $156.88 billion in the same period last year. Commerce Secretary Rajesh Agrawal expressed optimism that merchandise exports could cross the $500 billion mark if the current momentum is sustained.

The widening trade gap with China remains a structural concern for New Delhi, even as political engagement improves. Commerce and Industry Minister Piyush Goyal recently stated that the government is working to rebuild the relationship with China, but "the last word on the process had not yet been scripted". Commerce Secretary Agrawal added that both nations are in constant contact regarding trade-related issues to improve commercial ties.

The surge in bilateral trade underscores India's continued reliance on Chinese intermediates and finished goods for its manufacturing sector, despite the push for self-reliance. While Indian exports to China, including seafood, naphtha, and printed circuit boards, have shown promising growth, the heavily lopsided nature of the trade relationship highlights the challenge of achieving a more balanced economic engagement between the two Asian giants.

Looking ahead, the trajectory of India's trade relations will likely be shaped by the conclusion of the proposed India-US trade agreement and the outcome of ongoing structural discussions with Beijing. Agrawal noted that "the negotiations are in the right direction" and anticipates closing the deal at the earliest, which will depend on the finalisation of the broader US tariff framework.