Strong recovery in bilateral trade signals improving export competitiveness, easing trade deficit concerns, and growing momentum for India in key global markets
New Delhi (Economy India): India’s merchandise exports to China have recorded a sharp rebound in the current financial year, rising 32.83% year-on-year to $12.22 billion during April–November 2025, compared to $9.20 billion in the same period last year, according to data released by the Commerce Ministry.
The surge marks a significant shift in India–China trade dynamics, especially at a time when geopolitical tensions, supply chain realignments, and global economic uncertainty continue to shape international commerce. Importantly, the improvement in exports has also contributed to a substantial narrowing of India’s overall merchandise trade deficit in November, strengthening the country’s external sector outlook.
A Strong Second Half Push: Month-Wise Export Momentum
India’s export performance to China in FY26 has been uneven but resilient, with a clear acceleration in the second half of the April–November period.
Monthly Export Trend (India to China, FY26):
- April: $1.39 billion
- May: $1.62 billion
- June–August: Moderate softening amid global demand slowdown
- September: $1.46 billion
- October: $1.63 billion
- November: $2.20 billion (peak)
November emerged as a standout month, reflecting renewed Chinese demand for Indian goods and improved shipment volumes across select industrial and intermediate product categories.
In contrast, the previous year (FY25) saw exports stagnate, with monthly shipments dipping as low as $0.99 billion in August before a mild recovery later in the year.
Why China Matters for India’s Export Strategy
China remains one of India’s largest trading partners, though the relationship has traditionally been skewed in Beijing’s favour due to India’s heavy import dependence on Chinese electronics, machinery, chemicals, and intermediates.
A sustained rise in exports to China is strategically important for India for three reasons:
- Trade Deficit Management – China accounts for a large portion of India’s merchandise trade deficit
- Market Diversification – Penetration into a high-volume market despite competition
- Global Supply Chain Positioning – Leveraging China’s manufacturing ecosystem for upstream and downstream integration
Trade experts say the current export momentum suggests Indian suppliers are finding niche opportunities even within a highly competitive Chinese market.
Which Sectors Are Driving Export Growth?
While the Commerce Ministry does not publish a detailed China-only commodity-wise breakup each month, industry estimates and past trends indicate growth across:
- Petroleum products
- Iron ore and mineral-based products
- Engineering goods
- Organic and inorganic chemicals
- Agricultural commodities and processed foods
- Marine products
Analysts point out that Chinese demand for raw materials and intermediate goods has picked up as its industrial activity stabilises post domestic economic adjustments.
Trade Deficit Narrows Sharply in November
One of the most significant outcomes of rising exports has been the sharp contraction in India’s merchandise trade deficit.
- November 2025 trade deficit: $24.53 billion
- October 2025 trade deficit: $41.68 billion
This improvement was driven by:
- Higher exports
- Marginal moderation in imports
- Strong services exports
On a combined basis (merchandise + services):
- Total exports (Nov 2025): $73.99 billion
- Total imports: $80.63 billion
- Overall trade deficit: $6.64 billion, down from $17.06 billion a year earlier
Exports to the US Also Show Strength
China was not the only bright spot. India’s exports to the United States, its largest export destination, also rebounded strongly.
- Exports to the US (Nov 2025): $6.92 billion
- Growth: Over 21% YoY
This recovery came after a dip in October, underscoring the volatility in global demand but also India’s growing competitiveness in key markets.
What Changed From Last Year?
FY25: A Year of Sluggish Performance
- Global slowdown
- Weak Chinese domestic demand
- Elevated freight and logistics costs
- Inventory corrections across markets
FY26: Signs of Structural Improvement
- Better demand visibility
- Competitive pricing by Indian exporters
- Diversification of export baskets
- Improved trade facilitation and logistics
According to trade economists, India’s exporters have become more agile in navigating demand cycles and regulatory challenges.
Expert Views: Cautious Optimism Ahead
Trade analysts welcome the rebound but warn against complacency.
“Export growth to China is encouraging, especially given the structural imbalance in bilateral trade. However, sustaining this trend will require continued competitiveness and product diversification,” said a senior trade policy expert.
Others highlight that while exports are rising, import dependence on China remains high, and narrowing the trade gap will require long-term industrial capacity building in electronics, chemicals, and capital goods.
Policy Support and Strategic Context
The government’s export promotion efforts under:
- PLI schemes
- Logistics cost reduction initiatives
- Trade facilitation reforms
- Bilateral and multilateral engagements
have contributed to improved export readiness, though challenges such as currency volatility, global interest rates, and geopolitical risks persist.
India’s broader strategy focuses on:
- Expanding market access
- Improving ease of exporting
- Moving up the value chain
Can the Momentum Sustain?
Much will depend on:
- China’s economic trajectory
- Global commodity prices
- Exchange rate stability
- Demand in developed markets
December and the January–March quarter will be crucial in determining whether FY26 marks a decisive turnaround year for India’s external trade.
Economy India Takeaway
India’s 32.8% surge in exports to China during April–November 2025 is more than a statistical rebound—it signals growing resilience in Indian trade amid global uncertainty. While challenges remain, the narrowing trade deficit and diversified export growth provide a cautiously optimistic outlook for India’s external sector.
If sustained, this trend could play a key role in strengthening India’s balance of payments and supporting overall economic stability in the coming quarters.
(Economy India)
