China Overtakes US as India's Largest Trading Partner in FY26, Trade Deficit Climbs to $112.16 Billion

India's Trade Landscape Shifts as China Becomes Largest Trading Partner

China has surpassed the US to become India's largest trading partner in 2025-26, with bilateral trade reaching a record high of USD 151.1 billion. This significant shift marks a change in the dynamics of India's trade landscape, with the country's trade deficit with Beijing widening to USD 112.16 billion during the period.

According to government data, the US was India's largest trading partner for four consecutive years till 2024-25. The recent surge in trade with China has led to a significant increase in India's exports to the country, rising by 36.66 per cent to USD 19.47 billion during the last fiscal year. In contrast, imports from China increased by 16 per cent to USD 131.63 billion, resulting in a trade deficit of USD 112.6 billion in 2025-26, an all-time high.

In comparison to the US, India's outbound shipments to the US grew marginally by 0.92 per cent to USD 87.3 billion during the last fiscal year, while imports increased by 15.95 per cent to USD 52.9 billion. The trade surplus declined to USD 34.4 billion in 2025-26 from USD 40.89 billion in 2024-25.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

India's trade patterns also reveal that China was the country's top trading partner from 2013-14 till 2017-18 and again in 2020-21. Before China, the UAE was the country's largest trading partner. The US has been the largest partner since 2021-22.

Notably, India recorded negative exports growth in 2025-26 with several major trading partners, including the Netherlands, the UK, Singapore, Bangladesh, Saudi Arabia, Australia, France, South Africa, and Malaysia. However, exports to the UAE, Germany, Hong Kong, Italy, Nepal, Brazil, Spain, Belgium, and Vietnam registered positive growth last fiscal year.

Similarly, India recorded negative imports growth in 2025-26 with several major trading partners, including Russia, Iraq, Indonesia, Australia, Qatar, and Taiwan. Conversely, imports from the UAE, Saudi Arabia, Hong Kong, Switzerland, Singapore, Japan, Korea, Germany, Thailand, and Malaysia registered positive growth in the last fiscal year.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline