India’s dependence on Chinese industrial goods has deepened sharply, leaving sectors such as electronics, pharmaceuticals and clean energy vulnerable to supply disruptions and geopolitical risks, according to a report released by the Global Trade Research Initiative (GTRI).
The report said China now accounts for 30.8 per cent of India’s industrial goods imports despite contributing around 16 per cent to the country’s overall imports, underlining Beijing’s dominance in key manufacturing supply chains.
India’s total imports rose to USD 774.98 billion in 2025-26, of which USD 131.63 billion came from China, the report said. The widening trade imbalance pushed India’s trade deficit with China to USD 112.1 billion during the fiscal year.
According to GTRI, nearly 66 per cent of India’s imports from China, valued at USD 82.6 billion, are concentrated in four sectors — electronics, machinery, computers and organic chemicals — which are critical for domestic manufacturing and exports.
“India’s trade with China is no longer just a deficit story; it is a production-dependence story,” the report said.
China supplies 43 per cent of India’s electronics imports, 40 per cent of machinery and computer imports, and 44 per cent of organic chemicals, the report added. These imports include components used in smartphones, solar modules, electric vehicle batteries, pharmaceuticals and industrial machinery.
Strategic And Commercial Risks
GTRI Founder Ajay Srivastava said the dependence on Chinese inputs poses strategic and commercial risks because many Indian industries rely on uninterrupted supplies of intermediate goods from China.
“These are not discretionary purchases but core inputs that feed directly into India’s manufacturing ecosystem,” Srivastava said in the report.
The think tank warned that excessive reliance on a single country for critical industrial inputs could expose India to external shocks arising from geopolitical tensions, export restrictions or supply-chain disruptions.
The report comes at a time when several countries are reassessing supply-chain dependencies on China amid rising geopolitical uncertainty and concerns over critical minerals and advanced manufacturing.
China’s export controls on rare earth materials and critical minerals over the past year have already triggered concerns across global automotive and technology industries. India, despite holding substantial rare earth reserves, remains heavily dependent on Chinese processing and magnet supplies.
GTRI said India’s imports from China are increasingly linked to industrial production rather than finished consumer goods. Industrial inputs accounted for 98.5 per cent of India’s imports from China, indicating that Indian manufacturing remains closely tied to Chinese supply chains.
‘’Make in India” Could Face Constraints
The report argued that India’s efforts to expand exports and strengthen domestic manufacturing under initiatives such as “Make in India” could face constraints unless dependence on imported Chinese components is reduced.
To address the issue, GTRI recommended that India diversify supply chains and accelerate domestic manufacturing capabilities in sectors such as electronics, chemicals, machinery and clean energy components.
“A practical starting point would be to limit dependence on any single country to below 30 per cent of imports in critical sectors,” Srivastava said.
The report also suggested targeted industrial policies, investment incentives and technology partnerships to build local manufacturing ecosystems and reduce import vulnerabilities.
India has taken steps in recent years to encourage domestic production through production-linked incentive schemes in sectors such as electronics, semiconductors and solar manufacturing. However, industry experts say local manufacturing still relies heavily on imported Chinese components and machinery.
Exports to China remained below FY2021 levels at USD 19.5 billion, even as imports from China more than doubled over the same period, the report noted.