Worrying Trade Imbalance Between India And China | Opinion

Open your phone. The screen, the battery, the circuit board inside it, and most likely the charger by your bed came from China. Now ask what India sent to China in return. The honest answer, from the government's own trade database: shrimp, iron ore, naphtha, castor oil, granite, chilli, and human hair worth $494 million.

This is the ledger nobody reads. We debate atmanirbharta in television studios. The bahi-khata tells its own story.

Start with the headline numbers. In 2025-26, India imported goods worth $131.6 billion from China, 16 per cent more than the year before. In the same year, India exported goods worth $19.5 billion to China.

The gap is $112 billion, the largest trade deficit India runs with any country. For every one rupee of goods we sell to China, we buy goods worth almost seven rupees. Our exports to China actually grew faster last year, up 36 per cent, and the gap still widened by $13 billion. That is how deep the hole is.

Now look at the kind of goods, because that is where the real story sits. Of the $131.6 billion China sent us, $75.8 billion, or 58 per cent, was machinery and electronics. The single biggest item: smartphone and telecom parts, $10.3 billion, up 45 per cent in a year. Then laptops at $4.6 billion, semiconductor chips at $4 billion, lithium-ion batteries at $3.9 billion, solar cells at $1.9 billion, and OLED screens, up 185 per cent. Another $27 billion was chemicals, plastics and fertilisers, including the raw ingredients from which our "pharmacy of the world" makes medicines. Antibiotic ingredients alone: $1.6 billion.

Two smaller lines deserve headlines of their own. When war in West Asia disrupted Gulf supplies, urea imports from China jumped from $40 million to over $1 billion, a rise of 2,377 per cent. And the machines that run India's textile industry increasingly come from China too: imports of weaving machines more than doubled, embroidery machines grew 78 per cent. Even our looms are now Chinese.

The other side of the ledger is thinner and rawer. Of our $19.5 billion in exports, 44 per cent was primary produce, dug from the ground, pumped from refineries or pulled from the sea. Light naphtha was our biggest export at $1.9 billion.

Iron ore came next at roughly $1.6 billion. Then vannamei shrimp at $712 million, castor oil at $516 million, human hair for wigs at $494 million, chilli at $361 million, and granite blocks at $268 million. We send China our soil, our sea and our crops.

China sends us machines. Economists have a polite phrase for this trade pattern. In the nineteenth century it had a blunter name.

There is one genuine ray of light. India's electronics exports to China nearly quadrupled last year, from $0.8 billion to $3.2 billion. Assembled printed circuit boards, the heart of a smartphone, went from $36 million to $1.5 billion, as phones assembled in India began feeding components back into China's own supply chain. Small against $75.8 billion coming the other way, but proof that the direction changes when factories actually take root here.

So what should be done? Four things, and one thing to avoid.

First, go deeper, not just bigger, on manufacturing incentives. The production-linked schemes rewarded assembly, and assembly came. The next phase must reward making the parts inside: batteries, displays, circuit boards, chips. The $1.5 billion circuit-board success shows the method works when incentives target components, not just finished boxes.

Second, treat medicines and fertilisers as strategic, not commercial, questions. Bulk-drug parks were announced years ago; they need the urgency of a defence programme. Likewise, one bad year should not put a billion dollars of urea in Chinese hands. Long-term supply contracts with three or four countries, plus domestic capacity, are cheap insurance.

Third, climb the value ladder on exports. Iron ore should leave India as steel, naphtha as chemicals, shrimp as branded packaged food. Every step of processing done at home turns a hundred dollars of raw material into three hundred dollars of manufactured exports, and creates jobs where they are needed. The new trade agreements with the UK and New Zealand, and the talks with Europe, open exactly the markets where processed goods, not raw ones, earn the premium.

Fourth, fix the boring things. Factories need cheap power, fast ports, predictable taxes and easier land and labour rules. China did not conquer our markets with subsidies alone; it built scale over thirty years. Our states compete for investment now; the ones that make factory-building easy will write the next chapter of this ledger.

And the thing to avoid: import bans and boycott hashtags. Blocking Chinese parts today would not create Indian factories tomorrow; it would only make phones, medicines and fertiliser costlier for Indian families, because the factories do not yet exist. Dependence is ended by building, not by banning.

Remember this the next time the fan turns on, the phone lights up, or fertiliser reaches the field before sowing. The parts came from Shenzhen and Guangzhou. Somewhere a container of shrimp, iron ore and human hair is sailing east to pay for a small part of it. The ledger will change only when we make at home what we now unbox.

(Note: The author is a public policy analyst.)