China has regained its status as India's primary trading partner, overtaking the United States for the first time in two years, as indicated by the most recent data from the Global Trade Research Initiative (GTRI). In the fiscal year 2024, India's bilateral trade with China amounted to $118.4 billion. Imports surged by 3.24% to $101.7 billion, while exports witnessed an 8.7% increase, reaching $16.67 billion. 

In contrast, trade between India and the United States saw a slight downturn. Bilateral trade between the two countries amounted to $118.3 billion in FY24. Indian exports registered a decline of 1.32%, reaching $77.5 billion, while imports decreased by 20% to $40.8 billion. 

India's economic relationship with China has drawn considerable attention due to its substantial dependence on Chinese imports in crucial sectors like telecommunications, pharmaceuticals, and advanced technology. The GTRI report underscored this reliance, pointing out that India imported $4.2 billion worth of telecom and smartphone parts, constituting 44% of total imports in this category. Additionally, imports of laptops and PCs from China amounted to $3.8 billion, representing 77.7% of India’s imports in this sector. 

In response to its reliance on Chinese imports, India has implemented various measures aimed at reducing this dependency. These include the introduction of production-linked incentive schemes (PLI), imposition of anti-dumping duties, and implementation of quality control orders. Despite these efforts, India's import of lithium-ion batteries for electric vehicles, primarily sourced from China, amounted to $2.2 billion, representing 75% of such imports. This highlights China's crucial role in India's endeavour to electrify transportation. 

The report also highlighted changes in trade dynamics with other significant trading partners. Notably, trade figures with countries like Russia and Saudi Arabia have seen substantial shifts. Exports to Russia surged by 78.3%, while imports soared by 952%, resulting in a considerably widened trade deficit. 

In contrast, trade with Saudi Arabia exhibited a more balanced pattern of growth. While exports to Saudi Arabia more than doubled, imports increased at a slower pace. This indicates a more equitable trade relationship between the two countries compared to the dramatic shifts observed in trade dynamics with Russia. 

Image Source: The Tatva