US Retains Top Spot as India’s Trading Partner
In a significant development for India’s trade landscape, the United States has maintained its position as India’s largest trading partner for the fourth consecutive year, with bilateral trade reaching an impressive USD 131.84 billion in the fiscal year 2024-25. Meanwhile, India’s trade deficit with China has expanded to USD 99.2 billion, highlighting a stark contrast in trade dynamics between the two nations. Government data reveals that while exports to China have declined, imports have surged, contributing to the widening deficit.
Decline in Exports to China
India’s exports to China saw a notable contraction of 14.5% in the fiscal year 2024-25, dropping to USD 14.25 billion from USD 16.66 billion in the previous year. This decline underscores the challenges faced by Indian exporters in the Chinese market. In contrast, imports from China increased by 11.52%, rising to USD 113.45 billion compared to USD 101.73 billion in 2023-24. As a result, the trade deficit with China has widened by approximately 17%, escalating from USD 85.07 billion in the previous fiscal year.
Despite the downturn in exports, China remains India’s second-largest trading partner, with total trade amounting to USD 127.7 billion in 2024-25, up from USD 118.4 billion in the previous year. Historically, China held the title of India’s top trading partner from 2013-14 to 2017-18 and again in 2020-21, before the US took the lead in 2021-22.
Growth in Trade with the United States
In stark contrast to its relationship with China, India’s trade with the United States has flourished. Exports to the US increased by 11.6% in 2024-25, reaching USD 86.51 billion, up from USD 77.52 billion in the previous fiscal year. Imports from the US also saw a rise of 7.44%, totaling USD 45.33 billion compared to USD 42.2 billion in 2023-24. This growth has resulted in a trade surplus with the US of USD 41.18 billion, up from USD 35.32 billion the previous year.
Key exports to the US include pharmaceuticals, telecom instruments, and precious stones, while major imports consist of crude oil, machinery, and aircraft parts. The robust trade relationship is expected to strengthen further as both countries are currently negotiating a trade agreement aimed at boosting two-way commerce in goods and services to USD 500 billion by 2030.
UAE Ranks Third in Trade Partnerships
The United Arab Emirates (UAE) has emerged as India’s third-largest trading partner, with bilateral trade valued at USD 100.5 billion in the last fiscal year. This figure reflects the UAE’s growing importance in India’s trade ecosystem, particularly as it continues to strengthen economic ties with both the US and China.
As India navigates its trade relationships, the contrasting dynamics with the US and China highlight the complexities of global commerce. The ongoing negotiations for a trade agreement with the US signal India’s intent to enhance its economic engagement with its largest trading partner, while the widening deficit with China raises questions about the sustainability of current trade practices.
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