September 7, 2026
By Subrata Majumder
Key Takeaways:
The author says the old story—China as India’s deficit machine—flipped in 2025–26. China plus Hong Kong became India’s third-largest export market (fourth the year before). Estimated growth there of 35.97% and a ~$7.3 billion surplus offset about three-quarters of the slump in export growth to the United States (0.6% vs 11.8% a year earlier). The Netherlands fell 23.3%, the UK 7.6%.
Drivers cited: electronics (up 227.8%) and refined petroleum, together about a third of shipments to China. Apple’s China+1 suppliers in India (Foxconn, Tata Electronics, Pegatron India, Motherson) and ECMS plus PLI are credited. Forecast in the piece: electronics to China ~$3.5 billion in 2026–27 vs $3.2 billion.
Chinese media line quoted: imports from China are still the backbone of “Make in India” (phones assembled with 50–80% Chinese parts by value). Security worries remain; trade interdependence is the new paradox, and China is cast as a tariff-era safety valve, not only a burden.
Hitherto, China has been castigated for fueling the trade deficit of India. It has been the main force for widening the trade deficit by splurging exports to India and importing less. Eventually, it unleashed pressure on Balance of Payments.
Nonetheless, the India-China trade trajectory made a volte-face, reversing the gear of the trade burden. China surged its imports from India. China, including Hong Kong, emerged as the third biggest destination for India’s exports in 2025-26, rising from the fourth biggest destination in 2024-25, which rescued India from the fall in trade trap by US high tariffs. The USA has been the biggest destination for India’s export.
China’s increased imports from India, counterbalanced a greater part of the fall in the growth of exports to USA. According to an estimation, imports by China, plus Hong Kong, offset nearly 75 percent of the loss of export growth to the USA in 2025-26.
The spurt in the growth of exports to China left behind the traditional major export destinations in Europe, like the Netherlands, the UK, France and in Asia, Japan.
While India’ export dependency escalated on the Asian nation like China, the erstwhile major export destinations like USA and EU countries were losing potential for exports. Growth in exports to the USA – the biggest destination for India’s exports – plummeted due to high tariffs. Exports to the USA registered a slight growth by 0.6 percent in 2025-26, against 11.8 percent in the preceding year.
Following USA, exports to the Netherlands – the fourth biggest destination for exports – plunged by 23.3 percent in 2025-26, followed by the UK with a fall of 7.6 percent in the same year.
The notable feature for the turnaround in trade relations with China is that despite security concern looming large, India’s exports to China surged in 2025-26. India’s exports to China plus Hong Kong increased by 35.97 percent in 2025-26 – the highest growth in exports, despite global tariff tensions.
The massive growth in India’s exports to China and Hong Kong reflects a relief to India from the tariff stricken downfall in export growth to the USA. Growth in India’s exports to China + Hong Kong by a greater margin, counterbalanced the drop in export growth to the USA.
In the matrix of trade structure, the decrease in export growth to the USA yielded a loss of 11.2 percent in 2025-26 against the growth by 11.82 percent in 2024-25. In other words, India’s exports to USA increased merely by 0.62 percent in 2025-26, as compared to 11.82 percent in 2024-25.
In contrast, India’ exports to China+Hong Kong increased by 35.97 percent in 2025-26, fetching an export surplus of US$7317.1 million, which played a significant role in counterbalancing the export growth loss to USA.
Given the trajectory of trade diversification, it is reckoned that China is no more a trade burden. Instead, it acted as a safety valve for India.
According to Chinese media, more imports from China are not a negative point, but is a pivot to allowingMake in India a global success. China remains the irreplaceable supply chain for vital industrial components and intermediaries to India.
India is the second largest manufacturer of mobile phone in the world. Manufacturing of smart mobile phone is mostly an assembly operation and remains heavily reliant on imported component and parts. China supplies 50 to 80 percent of the materials in value terms in India’s assembly operation of mobile phones.
The striking success of India’s exports to China is led by both non-traditional merchandises and traditional items, propelled by electronic goods, such as telecom instruments, petroleum refinery products, non-ferrous metals, marine products, oil meals and gemstones.
To the surprise of many, in 2025-26 India’s major items for exports to China were electronic goods and petroleum refinery products, becoming the main drivers for surging exports to that country. Both these product groups accounted for nearly one third of India’s total exports to China in 2025-26.
India’s electronic goods exports to China increased by 227.8 percent in 2025-26, against 23.2 percent in the preceding year.
The unexpected growth in export of electronic goods to China was driven by the shifting of Apple, USA vendor system in India under China+1 strategy. Several of Apple’s suppliers in India contributed to shipment to China, such as Foxconn, Tata Electronics, Tata owned Pegatron Technology India, Motherson.
The promulgation of ECMS (Electronic Component Manufacturing Scheme), coupled with PLI scheme (Productivity Linked Incentive), became a catalyst for India’s capacity for manufacturing high end mobile phone parts and exporting markets like China and others. According to one estimate, India could reach US$3.5 billion in the export of electronic goods to China in 2026-27, as against US$3.2 billion in 2025-26.
All of these points unveil a new trajectory in trade relations between India and China with a paradox of interdependence.
Nonetheless, the India-China trade trajectory made a volte-face, reversing the gear of the trade burden. China surged its imports from India. China, including Hong Kong, emerged as the third biggest destination for India’s exports in 2025-26, rising from the fourth biggest destination in 2024-25, which rescued India from the fall in trade trap by US high tariffs. The USA has been the biggest destination for India’s export.
China’s increased imports from India, counterbalanced a greater part of the fall in the growth of exports to USA. According to an estimation, imports by China, plus Hong Kong, offset nearly 75 percent of the loss of export growth to the USA in 2025-26.
The spurt in the growth of exports to China left behind the traditional major export destinations in Europe, like the Netherlands, the UK, France and in Asia, Japan.
While India’ export dependency escalated on the Asian nation like China, the erstwhile major export destinations like USA and EU countries were losing potential for exports. Growth in exports to the USA – the biggest destination for India’s exports – plummeted due to high tariffs. Exports to the USA registered a slight growth by 0.6 percent in 2025-26, against 11.8 percent in the preceding year.
Following USA, exports to the Netherlands – the fourth biggest destination for exports – plunged by 23.3 percent in 2025-26, followed by the UK with a fall of 7.6 percent in the same year.
The notable feature for the turnaround in trade relations with China is that despite security concern looming large, India’s exports to China surged in 2025-26. India’s exports to China plus Hong Kong increased by 35.97 percent in 2025-26 – the highest growth in exports, despite global tariff tensions.
The massive growth in India’s exports to China and Hong Kong reflects a relief to India from the tariff stricken downfall in export growth to the USA. Growth in India’s exports to China + Hong Kong by a greater margin, counterbalanced the drop in export growth to the USA.
In the matrix of trade structure, the decrease in export growth to the USA yielded a loss of 11.2 percent in 2025-26 against the growth by 11.82 percent in 2024-25. In other words, India’s exports to USA increased merely by 0.62 percent in 2025-26, as compared to 11.82 percent in 2024-25.
In contrast, India’ exports to China+Hong Kong increased by 35.97 percent in 2025-26, fetching an export surplus of US$7317.1 million, which played a significant role in counterbalancing the export growth loss to USA.
Given the trajectory of trade diversification, it is reckoned that China is no more a trade burden. Instead, it acted as a safety valve for India.
According to Chinese media, more imports from China are not a negative point, but is a pivot to allowingMake in India a global success. China remains the irreplaceable supply chain for vital industrial components and intermediaries to India.
India is the second largest manufacturer of mobile phone in the world. Manufacturing of smart mobile phone is mostly an assembly operation and remains heavily reliant on imported component and parts. China supplies 50 to 80 percent of the materials in value terms in India’s assembly operation of mobile phones.
The striking success of India’s exports to China is led by both non-traditional merchandises and traditional items, propelled by electronic goods, such as telecom instruments, petroleum refinery products, non-ferrous metals, marine products, oil meals and gemstones.
To the surprise of many, in 2025-26 India’s major items for exports to China were electronic goods and petroleum refinery products, becoming the main drivers for surging exports to that country. Both these product groups accounted for nearly one third of India’s total exports to China in 2025-26.
India’s electronic goods exports to China increased by 227.8 percent in 2025-26, against 23.2 percent in the preceding year.
The unexpected growth in export of electronic goods to China was driven by the shifting of Apple, USA vendor system in India under China+1 strategy. Several of Apple’s suppliers in India contributed to shipment to China, such as Foxconn, Tata Electronics, Tata owned Pegatron Technology India, Motherson.
The promulgation of ECMS (Electronic Component Manufacturing Scheme), coupled with PLI scheme (Productivity Linked Incentive), became a catalyst for India’s capacity for manufacturing high end mobile phone parts and exporting markets like China and others. According to one estimate, India could reach US$3.5 billion in the export of electronic goods to China in 2026-27, as against US$3.2 billion in 2025-26.
All of these points unveil a new trajectory in trade relations between India and China with a paradox of interdependence.
About Subrata Majumder
Subrata Majumder is a former adviser to Japan External Trade Organization (JETRO), New Delhi, and the author of “Exporting to Japan,” as well as various articles in Indian media, including Business Line, Echo of India, Indian Press Agency, and foreign media, such as Asia Times online and Eurasia Review .
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