China floods Indian markets as trade deficit soars past $99 billion

New Delhi: India's trade deficit with China surged to a record $99.2 billion in the just-ended fiscal year, while it registered a trade surplus of $41.2 billion with the US, showed official data released on Wednesday.

India had trade deficits of $26.79 billion and $13.64 billion with the UAE and Hong Kong, respectively, during the year ended March 31. Notably, the country registered trade deficits with its free trade agreement partners such as the UAE, Australia, Japan, South Korea and Malaysia.

Imports from China rose 11.5% to $113.4 billion.

Dumping Watch

The surge was fuelled by rising demand for electronics, electric vehicle batteries, solar cells, and key industrial inputs-sectors where Beijing dominates New Delhi's supply chains-amid growing fears of dumping by the country. Exports to China declined 14.5% to $14.2 billion, falling below FY14 levels.

The import surge led to the trade deficit with China widening by about 17% from $85.07 billion in FY24.

India is meanwhile closely monitoring emerging developments over the Trump administration's move to levy hefty tariffs on Chinese imports. New Delhi believes this could eventually result in dumping of Chinese goods, either directly, or through a third country, in India. The government has set up an import monitoring mechanism to initiate prompt and timely actions against dumping. "Besides China, imports from some other countries such as Indonesia and Vietnam are being monitored," said an official. India's key imports from China include electronic components and instruments, computer hardware, telecom instruments, organic chemicals, electrical machinery, plastic raw materials and pharmaceutical ingredients. Top export items to China comprise iron ore, marine products, petroleum products, organic chemicals, and spices.

According to an export industry representative, many raw material imports from China are under-invoiced by around 25%.