Imagine you’re running a small shop. You buy more goods from your supplier than you sell to your customers. Over time, you’re spending more than you’re earning. That’s kind of what’s happening between India and China when it comes to trade. Let’s dive into what “trade balance” means, how it looks for India and China, and why it matters.
What Is a Trade Balance?
A trade balance is like a scorecard for a country’s buying and selling with another country. It’s the difference between what a country exports (sells) and what it imports (buys). If you sell more than you buy, you’ve got a “trade surplus”—extra cash coming in. If you buy more than you sell, you’ve got a “trade deficit”—you’re spending more than you’re making. For India and China, this scorecard has been lopsided for years.
India’s Trade with China: The Numbers
As of the latest full year we have data for—April 2023 to March 2024, also called fiscal year 2023-24—India and China traded goods worth $118.4 billion. That’s a huge amount! But here’s the catch: India imported (bought) $101.7 billion worth of stuff from China, while it exported (sold) only $16.67 billion to China. Subtract those numbers, and you get a trade deficit of $85 billion. In simple terms, India spent $85 billion more on Chinese goods than China spent on Indian goods.
This isn’t new. For over 15 years, China has been India’s top source of imports. Back in 2013-14, the deficit was $36.2 billion. By 2023-24, it had more than doubled. And in the first 10 months of 2024-25 (April 2024 to January 2025), imports from China hit $95.01 billion, while exports lagged far behind, pushing the deficit close to last year’s total already.
What Does India Buy and Sell?
So, what’s India buying from China? A lot of it is tech and machinery—things like smartphone parts ($4.2 billion in 2023-24), laptops, and electric vehicle batteries. About 44% of India’s telecom equipment and 77% of its laptops come from China. These are everyday items we use, but India doesn’t make enough of them at home yet, so it relies on China.
On the flip side, what does India sell to China? Mostly raw materials like iron ore ($3.45 billion in 2023), cotton, and spices, plus some refined petroleum and seafood. These exports are valuable, but they’re nowhere near enough to match what India buys. It’s like selling a few bags of rice while buying a truckload of gadgets—there’s a big gap.
Why Is the Deficit So Big?
A few reasons explain this imbalance. First, China is a manufacturing powerhouse. It makes high-tech goods cheaply and quickly, which India needs for its growing economy. Second, India’s exports to China are limited. China doesn’t need as much of what India offers, like raw materials, because it has its own supplies or gets them elsewhere. Third, India faces hurdles selling more to China—like strict rules or competition—which keeps its exports low.
This gap creates a “trade deficit” that’s been growing. In 2021-22, it was $73.3 billion. By 2023-24, it hit $85 billion. Some worry it could top $100 billion soon if trends continue.
Does This Hurt India?
A trade deficit isn’t always bad. Buying stuff from China—like cheap parts—can help Indian companies make products and grow. But a big, growing deficit can cause problems. It means money is flowing out of India to China, which can weaken India’s currency (the rupee) over time. It also shows India depends heavily on China for key items, which could be risky if tensions rise—like they have over border issues in the past.
India’s trying to fix this. Programs like “Make in India” aim to produce more at home, cutting the need for Chinese imports. But it’s a slow process, and for now, the deficit keeps climbing.
What About China’s Side?
China, meanwhile, has a massive trade surplus with the world—about $823 billion in 2023. With India alone, it enjoys an $85 billion surplus (the flip side of India’s deficit). China exports way more than it imports globally, making it a trade giant. India’s deficit with China is just one piece of that puzzle.
Why Should You Care?
This trade balance affects your life more than you might think. That phone in your pocket? Probably has Chinese parts. The price you pay for it—and India’s economy—ties back to this trade gap. It also shapes India’s relationship with China, a neighbor that’s both a rival and a partner. If India can shrink this deficit, it could mean more jobs and growth at home. If not, the gap might widen, affecting everything from prices to politics.
Looking Ahead
India’s trade balance with China is a tale of dependence and opportunity. For now, it’s a big deficit—$85 billion in 2023-24 and counting. India’s working to make more at home and sell more abroad, but China’s lead in manufacturing keeps the scales tipped. It’s a challenge India’s tackling one step at a time.
