China Becomes India’s Biggest Trade Partner in FY26
India’s overall trade with China reached USD 151.1 billion in FY26, making China India’s top trading partner again after a gap since 2017–18 and 2020–21. Meanwhile, the US, which held the top spot for four consecutive years until FY25, has moved to second place.
Rise in Imports and Trade Deficit
The main reason for China’s dominance is the increase in imports. India’s imports from China grew by 16% to USD 131.63 billion. Despite a sharp rise in exports by 36.66% to USD 19.47 billion, the trade deficit widened to an all-time high of USD 112.6 billion, up from USD 99.2 billion last year. This indicates India’s continued dependence on Chinese goods, especially in electronics, machinery, and raw materials.
Trade with the US Shows Moderate Growth
Trade with the US grew slowly. India’s exports to the US increased slightly by 0.92% to USD 87.3 billion, while imports grew by 15.95% to USD 52.9 billion. As a result, India’s trade surplus with the US decreased from USD 40.89 billion in FY25 to USD 34.4 billion.
Key Facts for Exams
- China became India’s largest trading partner in FY26 with trade worth USD 151.1 billion.
- India’s trade deficit with China reached a record USD 112.6 billion.
- The US was India’s top trade partner from FY22 to FY25.
- A trade deficit occurs when imports surpass exports.
Changes in Other Trade Partnerships
India’s exports increased to countries like UAE, Germany, Brazil, and Vietnam, but declined to the Netherlands, UK, and Bangladesh. For imports, growth came from Saudi Arabia, Japan, and Germany, while imports declined from Russia, Iraq, and Indonesia. These trends show India’s trade environment is becoming more dynamic and complex.
