India is increasing exports of finished goods to China, with electronics being a prime example in trade relations that remain predominantly in Beijing's favor. Analysis of government data shows that Indian exports to China grew by almost 40% in the five months leading up to August, with goods in electronics and machinery being the main drivers of this growth.
Export revenue to China tripled to $3.18 billion in the fiscal year ending in March. This growth is driven by products such as printed circuit board assemblies, smartphones, display modules, and telecommunication equipment. Electronics shipments continue to rise in the current fiscal year, increasing by more than 15% from April to August compared to the same period last year.
Nevertheless, this increase is based on a relatively low level and has only slightly reduced the huge trade imbalance between India and its neighbor. Radjou Goel, Secretary General of the Indian Electronics Industry Association, noted that the export surge is partly linked to pressure on suppliers who need to meet the demand for high-tech equipment for artificial intelligence-related products, as well as the growth in data centers. He added that this stimulated the export of electronics from India to China.
For New Delhi, recent successes support long-standing efforts to expand manufacturing and secure a more significant role in global supply chains. These events occur against the backdrop of India and China striving to restore relations after years of stagnation, as well as due to Washington's tariff policies motivating both governments to deepen economic interaction.
Pankaj Mohindru, Chairman of the Indian Telecommunications and Electronics Association, stated that this demonstrates the beginning of Indian manufacturing gaining trust in one of the most competitive global value chains. Arun Kumar Garodia, Managing Director of Corona Steel Industry Pvt., suggested that the increase in exports, although small, may indicate that Beijing is becoming more receptive to Indian goods in the current geopolitical climate.
However, there is an important nuance in the statistics. Chinese customs data does not record a comparable increase in the import of printed circuit boards from India; most of the growth is reflected in the smartphone and other telecommunication product segments. Industry experts believe that differences in goods classification between the two countries may complicate the precise determination of the reasons for this growth.
Furthermore, China remains a relatively small destination for Indian goods, accounting for 4.4% of exports in March last year, compared to just over 3% the year before. The US, India's largest market, accounts for nearly a fifth.
The recent export growth has barely affected the imbalance between the two largest economies in Asia. In March, India imported Chinese goods worth $131.6 billion, which accounted for almost 17% of its imports and significantly exceeded the value of goods it sold to China.
Nevertheless, exporters are confident that Indian supplies to China will continue to grow. According to the latest data, the growth has extended beyond electronics: exports of machinery to China increased by approximately 21% from April to August compared to last year, including auto components, hand tools, and machinery. Mohindru added that the task now is to sustain this export and expand it to components, sub-assemblies, and finished products, while deepening India's capabilities in design and components.
