The report highlighted that while India’s exports to China in FY 2026 were $19.5 billion, below the $21.2 billion recorded in FY 2021, it noted that imports have more than doubled over the same period, rising from $65.2 billion to $131.6 billion.
As per data from India’s Directorate General of Commercial Intelligence and Statistics (DGCI&S) for CY 2025, 98.5% of India’s imports from China are industrial products, while agriculture, fuels, and gems and jewellery together account for less than 1.5%.
China represents about 16% of India’s total imports, with its dominance far more pronounced in industrial goods, supplying 30.8% of India’s needs.
66% of India’s imports from China, valued at $82.6 billion, are clustered in electronics, machinery, computers, and organic chemicals. China accounts for 43% of India’s electronics imports, 40% of machinery and computer imports, and 44% of organic chemicals.
The report said that beyond trade volumes, the imbalance was reflective of a highly skewed sectoral dependence within certain sectors for non-discretionary core inputs that directly feed into the country’s manufacturing ecosystem.
Attributing this import dependence to less on consumption and more on weak domestic production, the report highlighted that Indian industry relies heavily on Chinese inputs like electronics parts, EV batteries, solar modules, APIs and speciality chemicals, which are hard to replace at scale, and keep supply chains tied to China as India tries to grow its exports.
Stressing on the need for India to build domestic capacity in key sectors by diversification of supply chains, the report has pitched for a limit of 30% import dependence on any single country in critical sectors like pharmaceuticals, electronics, EVs, and clean energy to hedge exposure to geopolitical or commercial disruptions.
As India eases investment restrictions on China, the report expects Chinese automakers to expand through local assembly and increased EV imports if tariffs fall, from which it projected an increasing pressure on Indian firms by the reshaping of supply chains.
It stated that Chinese companies may continue sourcing key inputs like auto components, batteries, polymers, coatings, and adhesives from China rather than local suppliers, which may reduce
domestic value addition and hurt upstream industries, as it cited a similar trend witnessed in Thailand.
It called for a diversification strategy in terms of building domestic capacity along with non-Chinese suppliers, adding that expansion of Chinese investment without strong local sourcing rules may lead to a situation where India gets assembly plants but not deep manufacturing.
