For years, India’s trade relationship with China has been defined largely by one number: the widening deficit. But a new trend is beginning to emerge beneath that imbalance.
Indian manufacturers are selling more electronics, engineering goods and components to China, with exports recording a sharp rise during the first five months of the current financial year.
Indian exports to China jumped nearly 40% in the April-August period compared with a year earlier, according to an analysis of government trade data. Electronics and engineering products were among the major contributors.
The rise is significant because China has traditionally been a difficult market for Indian manufactured goods to penetrate. However, the growth comes from a relatively low base and remains far too small to materially reduce India’s massive trade deficit with its neighbour.
Indian exports to China rose nearly 40% during April-August.
Electronics exports to China had tripled to $3.18 billion in FY26.
Electronics shipments rose more than 15% year-on-year during April-August.
Engineering exports to China increased about 21%.
China accounted for around 4.4% of India’s exports in FY26.
India imported $131.6 billion worth of goods from China in FY26.
Chinese goods accounted for nearly 17% of India’s total imports.
Electronics has emerged as one of the strongest-performing categories in India’s shipments to China.
India’s electronics exports to China tripled to $3.18 billion in the financial year ended March 2026, supported by products such as:
Printed circuit board assemblies
Smartphones
Display modules
Telecom equipment
The momentum has continued in the current financial year, with electronics exports rising more than 15% year-on-year during April-August.
Industry representatives attribute part of the increase to the rapid expansion of artificial intelligence infrastructure and data centres worldwide.
Growing demand for sophisticated electronic equipment is creating opportunities across the technology supply chain, including for manufacturers operating from India.
The trend also offers an early indication that Indian manufacturing is finding a larger role in international electronics supply chains.
The improvement is not limited to electronics. Engineering exports from India to China rose around 21% year-on-year during April-August.
Products contributing to the increase include:
Machinery and parts
Automobile components
Hand tools
Other engineering products
Despite the sharp growth, China remains a relatively small destination for Indian goods. China accounted for about 4.4% of India’s exports in the financial year ended March 2026, compared with slightly more than 3% a year earlier.
The US, in comparison, remains India’s biggest export market and absorbs almost one-fifth of the country’s merchandise exports. This means that even a strong percentage increase in shipments to China is starting from a much smaller base.
The improvement in exports has not fundamentally altered the larger India-China trade equation. India imported $131.6 billion worth of goods from China during the financial year ended March 2026.
China supplied nearly 17% of India’s total merchandise imports during the period.
Key import categories include:
Electronics
Machinery
Electrical equipment
Chemicals
Industrial components and intermediate goods
The value of imports from China continues to vastly exceed India's exports to the country, leaving India with one of its largest bilateral merchandise trade deficits.
That dependence also means that even rapid export growth may take years to make a meaningful difference to the overall trade balance.
The rise in exports comes at a time when India and China are attempting to stabilise economic relations after several years of political and border tensions.
Changes in the global trading environment are also playing a role. Tariff disputes and shifts in supply chains are pushing countries and companies to reassess sourcing, manufacturing and export markets.
But the bigger trade picture remains unchanged: Indian exports are rising rapidly, while the enormous volume of imports from China continues to keep the bilateral trade balance overwhelmingly tilted in Beijing’s favour.
