India Merchandise Exports Rise 32.8% to China

India Merchandise Exports Rise 32.8% to China

Why in News? 

According to the Commerce Ministry’s recent data, India’s merchandise exports to China have shown strong momentum, reflecting a notable shift in bilateral trade dynamics. During April–November 2025, exports surged by 32.83 percent to USD 12.22 billion, underscoring improved market access and demand-driven growth.

Highlights of Commerce Ministry’s Data

• Export Performance with China: India’s trade engagement with China showed clear improvement in the current financial year. As per Commerce Ministry data released on 15 December 2025, India’s merchandise exports to China rose sharply during April to November 2025. Exports reached USD 12.22 billion, compared to USD 9.20 billion in the same period of the previous year. This reflects a growth of 32.83 percent, indicating rising demand for Indian goods.

• Monthly Export Momentum: Merchandise exports to China displayed a steady upward trend across the year. Exports stood at USD 1.39 billion in April 2025 and increased to USD 1.62 billion in May. After moderate movement in the middle months, export momentum strengthened from September 2025. Exports rose from USD 1.46 billion in September to USD 1.63 billion in October. The highest level was recorded in November 2025 at USD 2.20 billion, showing renewed trade activity toward the end of the period.

• Comparison with Previous Year: The export trend contrasts with the relatively weaker performance in FY 2024–25. During that year, exports to China began at USD 1.25 billion in April and declined to USD 0.99 billion by August. A limited recovery followed, with exports reaching USD 1.16 billion in November 2024. 

• Trade and Deficit Reduction: India’s total trade position improved significantly in November 2025. Combined merchandise and services exports stood at USD 73.99 billion, compared to USD 64.05 billion in November 2024. Imports declined slightly to USD 80.63 billion, resulting in an overall trade deficit of USD 6.64 billion. This marked a sharp improvement from the USD 17.06 billion deficit recorded a year earlier. The merchandise trade deficit alone narrowed from USD 41.68 billion in October 2025 to USD 24.53 billion in November.

• Cumulative Export Performance: Cumulative exports for April to November 2025 showed sustained growth. Total exports of goods and services reached USD 562.13 billion, registering a 5.43 percent increase over the same period in 2024. Merchandise exports stood at USD 292.07 billion, growing 2.62 percent year on year. Non-petroleum exports performed better, rising 5.86 percent to USD 254.08 billion, reflecting diversification beyond energy products.

• Sectors Supporting Export Growth: Several sectors contributed strongly to export expansion in November 2025. Engineering goods exports rose 23.76 percent to USD 11.01 billion. Electronic goods recorded higher growth of 38.96 percent, reaching USD 4.81 billion. Gems and jewellery exports increased 27.8 percent to USD 2.64 billion. Drugs and pharmaceuticals grew 20.91 percent to USD 2.61 billion, while petroleum products rose 11.65 percent to USD 3.93 billion. Agricultural and resource-based items such as iron ore, cashew, coffee, and marine products also showed strong gains.

• Major Trade Partners: Imports of gold, crude petroleum, vegetable oil, and newsprint declined in November 2025. In terms of destinations, the United States, China, Spain, the UAE, and Tanzania recorded strong export growth for India. For imports, China remained the largest source, followed by the United States, Hong Kong, Thailand, and Brazil during the same period.

Policy Measures and Trade Facilitation Efforts Supporting Export Growth in India

• Export Promotion Mission (EPM): India launched the Export Promotion Mission (EPM) in the Union Budget 2025–26 to make export growth more structured and efficient. The Cabinet approved this mission with a total budget of ₹25,060 crore for FY 2025‑26 to FY 2030‑31. This mission replaced multiple fragmented export support schemes with one unified and digitally driven framework. The mission aims to provide coordinated support for exporters, especially Micro, Small and Medium Enterprises (MSMEs).

• RoDTEP Scheme: The government reinstated the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for special exporter categories effective 1 June 2025. This scheme refunds certain taxes, duties, and levies that are not rebated otherwise, reducing the cost burden on exporters. The scheme has already refunded significant amounts in previous years and has an allocation of ₹18,233 crore for FY 2025–26. By providing reimbursements, RoDTEP makes Indian goods more cost-competitive abroad and helps exporters compete with global peers.

• Extend Export Incentives: The government extended key export incentive programs like duty remission and tax reliefs to support competitiveness. These measures support units like Export Oriented Units (EOUs), Special Economic Zones (SEZs), and other registered exporters. The continuation of these incentives through 2025 helps maintain stable policy support for export sectors that face tariff and non‑tariff barriers in global markets. 

• Production‑Linked Incentive (PLI): The government expanded Production Linked Incentive (PLI) schemes across 14 sectors including electronics, pharmaceuticals, and automobiles. These schemes incentivize local production and help build global supply chains. By strengthening domestic manufacturing capabilities, PLI schemes indirectly support export growth by increasing production capacity and improving product quality.

Implications for India 

• Impact on Trade Balance: India’s trade balance with China has a long history of large deficits. India imported goods like machinery and electronics at high volumes, while exports remained comparatively low, leading to persistent imbalance. China remains one of India’s largest sources of imports and one of its top export destinations, a smaller deficit eases immediate external pressure on the economy. This change gives policymakers more breathing room to manage macroeconomic policy and reserves. 

• Foreign Exchange and Currency Pressures: Higher exports support foreign exchange generation. Export receipts helped keep external receipts resilient in November 2025. The Reserve Bank of India and market reports show that foreign exchange reserves remained sizeable in late 2025. Adequate reserves reduce the need for emergency interventions. Strong reserves also let the central bank smooth volatility without drastic policy shifts. A weaker currency can boost export competitiveness.

• Strategic Trade Dimensions: Rising exports to China alter bilateral economic ties. Greater trade with China increases interdependence in key sectors. This interdependence creates opportunities for market access. It also creates strategic vulnerabilities if political tensions rise. Policymakers must balance economic gains with national security and supply chain resilience.