By Subrata Majumder
China is no more a trade burden. It turned complimentary. Paradoxically, large imports from China, which were alleged for wide trade deficit, reshaped India’s export basket. It opened new scope for export of value added products, outplaying traditional products.
China emerged 3rd biggest destination for India’s exports in 2025-26 and registered fastest growth in exports, outplaying USA and the west. India’s exports to China increased by 35.9 percent in 2025-26 , while exports to USA and UAE – two biggest destinations –plateau with simmering growth, ranging between 1-2 percent.
The noticeable characteristics in India’s new export basket is that export surged on import based inputs. It left behind traditional merchandise exports based on domestic resources, such as agricultural, textile, garments and mineral resources.
Exports of electronic goods is a case in point. It registered highest growth in export basket and became the second biggest component in sharing exports to the world. During three years period – 2022-23 to 2026-26 – exports of electronic goods increased by over 22 percent to 32 percent. It emerged 2nd biggest merchandise, sharing 11.4 percent in export basket in 2025-26.
Eventually, in the event of new shape to export basket, amid global trade conundrum, owing to USA tariff war and protectionism, China emerged the biggest supporter to salvage India’s export. Despite high tariff by Trump administration, where USA has been the biggest destination for India’s exports, China emerged the major alternative for export diversification.
China played significant role as principal input to reshape India’s export basket. It generated more of value added products, such as electronic goods and drugs and pharmaceuticals. Nearly half of imports of electronic goods, which predominantly acted inputs for exports, is from China (48 percent in 2025-26).
Key imports of electronic goods from China were telecommunication equipments and components and parts. They include mostly electrical apparatus for Line Telephony or Line telegraphy, followed by Integrated Circuits (ICs), micro assembles, lithium batteries and others.
These imports generate manufacture of mainly mobile phones like smart phones and mobile communication equipments. Manufacture of smart phones, like iPhone, by Apple Inc in India is a case in point. According to sources, Apple vendors, like Foxconn and Tata electronics, rely on Chinese inputs like ICs and specialized parts.
The second biggest merchandise, which outplayed traditional export is drugs and pharmaceutical product. India’s exports of drugs and pharmaceuticals rely heavily on imports of basic drugs and intermediates, such as API (Active Pharmaceutical Ingredients) and bulk drugs.
China accounts for a biggest share in India’s imports of basic drugs and intermediates. It accounted for over 73 percent in total imports in 2025-26. Similar stakes China pitched over decades in India’s imports. Eventually, corresponding relation between exports and imports of drugs and pharmaceuticals portray India’s reliance on Chinese inputs.
Against these backdrops, India’s striking growth in exports to China paves the way for a better trade relation with China. Hitherto, China was subject to largest number of ant-dumping duties and alleged for widening trade deficit. China now acts as counterbalance to fall in export growth to USA as well as engine for value added export.
China is not only a major exporter in the world. It is also a big importer. It accounts for nearly 10.5 percent of global imports. Surge in India’s exports to China was principally driven by petroleum refinery products and electronic goods. Export of petroleum refinery products increased by 93.3 percent in 2025-26 and became the biggest component in India’s exports to China.
Further, exports of electronic goods to China surged in 2025-26 and became one of the major drivers to boost export to China. It increased by over 227 percent in 2025-26, sharing about 17 percent of India’s export to China. Factors attributed to the spurt in exports of electronic goods to China were China focusing on manufacturing of high tech engineering and AI infrastructure and shifting its value chain procurement for simpler intermediate assembly tasks, sub-assemblies and components, from low cost countries, like India ( such as PCB’s display models and telecom equipments)
According to Chinese media, imports from China are not deterrent to India’s growth. Instead, it acts as engine to strengthen Make in India a global success.
The promulgation of ECMS (Electronic Component Manufacturing Scheme), coupled with PLI scheme (Productivity Linked Incentive), became 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.
The momentum of surge in exports by India to China continued into current fiscal year. India’s exports to China rose by about 36 percent in April-September 2026. The trajectory unveils that amid the global subdued market, India’s potential to sustain exports to China will magnify. (IPA Service)
