At present China has taken over the US as India’s largest trading partner with bilateral trade reaching $151.1 billion. The US has been India’s largest trading partner for last four consecutive years, write Parthu Venkatesh P and Durairaj Kumarasamy of MRIIRS’ Department of Economics, School of Commerce and Economics (SoCE).
India’s trade deficit with China has exceeded the $112 billion (2025–26 Fiscal Year) an eye-catching figure that has raised concerns for import substitution, stringent economic policy and fast decoupling. But with the increased size of the deficit, while politically charged, challenges obscuring a more uncomfortable truth: the trade imbalance is not just large, it is functionally dependent in how India is engaging into the world economy. The figure below displays the severity of the trade deficit.
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