How India became dangerously addicted to Chinese imports
India's trade deficit with China has surged to $112 billion despite diplomatic tensions and protective tariffs, highlighting a deepening economic asymmetry. While India successfully reduced its reliance on Chinese finished goods like toys and smartphones, it remains heavily dependent on Chinese industrial inputs and raw materials for its own manufacturing. Experts warn that this structural dependence on critical components gives Beijing significant leverage over India's industrial economy.
- ▪India's trade deficit with China increased from $44 billion in 2020 to $112 billion this year.
- ▪China supplies over 30% of India's industrial imports, including critical inputs for electronics, machinery, and chemicals.
- ▪India successfully reduced toy imports by a third through higher tariffs, but this success has not been replicated in other sectors.
- ▪India's manufacturing sector, including iPhone assembly, relies heavily on imported components from China rather than local production.
- ▪China's excess capacity and slowing domestic economy are driving aggressive exports to India, exacerbating the trade imbalance.
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| Publication time | Mon, 05 Oct 2026 01:42:11 GMT |
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How India became dangerously addicted to Chinese importsImage source, AFP via Getty ImagesImage caption, Xi and Modi have vowed to address growing trade imbalances ByNikhil InamdarMumbaiPublished12 minutes agoTake a walk into an Indian toy shop and as well as picking up a new favourite plaything for a child, you might just get an insight into how the nation is battling for a batter economic relationship with its all-powerful neighbour China.Six years ago, in an attempt to push local manufacturing and keep substandard toys out of its market, India raised tariffs on imported toys from 20% to 60% and eventually to 70%.Retailers were up in arms and said that domestic firms could never match the foreign-made stuff.
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