In a significant realignment of trade relations, China has once again emerged as India’s largest trading partner for the fiscal year 2025-26. According to the latest data from the Ministry of Commerce, the total bilateral trade between the two Asian giants soared to $151.1 billion, surpassing India’s trade with the United States.
This shift marks the end of a four-year period (starting in 2021-22) during which the United States held the position of India’s premier trading partner.
The China Trade Surge: A Double-Edged Sword
While total trade volume has increased, the data highlights a widening gap between imports and exports, pushing India’s trade deficit with Beijing to an all-time high.
Exports to China: Witnessed a robust growth of 36.66%, reaching $19.47 billion.
Imports from China: Climbed by 16% to reach $131.63 billion.
The Deficit: The trade gap swelled to $112.16 billion in 2025-26, up from $99.2 billion the previous year—a trend that continues to be a point of concern for Indian policymakers.
US-India Trade: Declining Surplus
Trade with the United States, though still substantial, saw a contraction in the trade surplus that India typically enjoys with the American market.
Total Trade: Stood at approximately $140.2 billion.
Exports to US: Grew marginally by 0.92% to $87.3 billion.
Imports from US: Surged by 15.95% to $52.9 billion.
The Result: India’s trade surplus with the US declined to $34.4 billion, down from $40.89 billion in the previous fiscal.
Global Trade Footprint: Winners and Losers
The Commerce Ministry’s report also shed light on India’s performance with other key global markets during the 2025-26 fiscal year.
Export Performance
| Positive Growth | Negative Growth |
| UAE, Germany, Hong Kong, Italy, Nepal, Brazil, Spain, Belgium, Vietnam | Netherlands, UK, Singapore, Bangladesh, Saudi Arabia, Australia, France, Malaysia |
Import Trends
Decreased Reliance: India successfully reduced imports from Russia, Iraq, Indonesia, Australia, Qatar, and Taiwan.
Increased Imports: Inbound shipments rose from the UAE, Saudi Arabia, Switzerland, Singapore, Japan, and Korea.
Historical Perspective
India’s top trading partner status has historically oscillated between a few key nations. The UAE held the spot prior to 2013, followed by a period of Chinese dominance between 2013-14 and 2017-18. The US took the lead in 2021-22 and held it until this latest fiscal report.
The return of China to the top spot, coupled with the record-breaking deficit, is expected to intensify the “Atmanirbhar Bharat” (Self-Reliant India) initiative as the government seeks to reduce dependency on Chinese industrial inputs and electronics.