US India’s top trading partner for 4th year; trade gap with China widens to $99.2 billion

The US remained India’s largest trading partner for the fourth consecutive year in 2024-25 with bilateral trade valued at $131.84 billion, while the country’s trade deficit with China widened to $99.2 billion during the same period, government data showed.

In the last fiscal, India’s exports to China contracted 14.5 per cent to $14.25 billion as against $16.66 billion in 2023-24. The imports, however, rose by 11.52 per cent in 2024-25 to $113.45 billion against $101.73 billion in 2023-24.

The trade deficit with China has widened by about 17 per cent to $99.2 billion in the last fiscal from $85.07 billion in 2023-24.

China continued to be the second largest trading partner of India with $127.7 billion two-way commerce in 2024-25 as compared to $118.4 billion in 2023-24.

According to the Commerce Ministry data, China was India’s top trading partner from 2013-14 till 2017-18 and also in 2020-21. Before China, the UAE was the country’s largest trading partner. The US has been the largest partner since 2021-22.

Commenting on the data, think tank Global Trade Research Initiative (GTRI) said India’s trade deficit with China hit a “staggering" $99.2 billion in FY25, which is a “record gap" that reflects deeper structural dependencies, not just trade imbalances.

“Imports surged by 11.5 per cent to $113.4 billion, driven by rising demand for electronics, EV batteries, solar cells and key industrial inputs — sectors where China dominates India’s supply chains. China is India’s top supplier in all eight major industrial product categories," GTRI founder Ajay Srivastava said.

The PLI (production linked incentive) schemes are fuelling import growth due to their heavy reliance on imported components, he said.

“What’s more alarming is that India’s exports to China fell 14.5 per cent, dipping to $14.2 billion — now lower than they were in FY2014, when the rupee was significantly stronger. This signals more than a trade issue; it’s a competitiveness crisis. These numbers are a wake-up call. India needs to fix its internal manufacturing gaps and invest in deep industrial capabilities. Without that, the deficit will only grow, and so will our dependency," he added.

During the last fiscal, the UAE with $100.5 billion was the third largest trading partner of India. In the last fiscal, India’s exports to the US rose by 11.6 per cent to $86.51 billion as against $77.52 billion in 2023-24. The imports were up by 7.44 per cent in 2024-25 to $45.33 billion against $42.2 billion in 2023-24.

The trade surplus with America touched $41.18 billion in the last fiscal from $35.32 billion in 2023-24.

In 2024, India’s main exports to the US included drug formulations and biologicals ($8.1 billion), telecom instruments ($6.5 billion), precious and semi-precious stones ($5.3 billion), petroleum products ($4.1 billion), gold and other precious metal jewellery ($3.2 billion), ready-made garments of cotton, including accessories ($2.8 billion), and products of iron and steel ($2.7 billion).

Imports included crude oil (USD 4.5 billion), petroleum products ($3.6 billion), coal, coke ($3.4 billion), cut and polished diamonds ($2.6 billion), electric machinery ($1.4 billion), aircraft, spacecraft and parts ($1.3 billion), and gold ($ 1.3 billion).

The bilateral trade between India and the US is expected to get a boost in the coming years as both are negotiating a trade agreement. The aim is to increase two-way commerce in goods and services to $500 billion by 2030 from $191 billion at present.

India