Trade Strategy Shift: India Strengthens Domestic Manufacturing Amid China Dependence

India is making efforts towards increasing diversification of exports to China and reducing its reliance on imports. An Indian official pointed out that India was developing indigenous capabilities and expanding its sources. The official also pointed out that India will find it challenging to sever all its relations with China since inputs from China are essential for India’s industrial progress.

India imports raw materials, intermediates, and capital goods. Auto components, electronic components, mobile phone components, machinery, and active pharmaceutical ingredients form the major part of its import basket. They facilitate the production of finished products. The export value from India to China is forecasted to increase by 37 percent to $19.47 billion in 2025-26 compared to $14.25 billion in 2024-25. Indian imports from China have increased by 16% to $131.63 billion. The trade deficit reached $112.6 billion in 2025-26.

Exports of printed circuit boards and electrical equipment increased in the last fiscal year. Telephone systems, shrimp, and aluminum ingots were also major export items. However, broadening the export basket is necessary to increase India's share of Chinese imports. Imports of electronics, electrical machinery, and pharmaceutical materials have increased. Imports of auto parts, telecommunications equipment, and industrial machinery have also increased.