Trade between India and China has recently picked up again, particularly against the backdrop of global expansion in artificial intelligence (AI) and data centers. As India's presence in these sectors has significantly increased, the country is boosting its export of finished electronic products to China.
According to a Bloomberg report, during the first five months of the current year (up to August), Indian exports to neighboring China increased by approximately 40%. This growth is largely driven by the export of electronics and engineering goods, indicating shifts in China's trade relations, which were long characterized by the dominance of Chinese goods.
In the fiscal year ending in March, the volume of Indian electronics supplied to China tripled, reaching $3.18 billion. The main contributors to this figure were printed circuit boards, smartphones, display modules, and telecommunication products. According to the report, this pace has been maintained in the current fiscal year: electronics exports grew by over 15% from April to August compared to the previous year.
Radhu Goel, Secretary General of the Indian Electronics Industry Association, told Bloomberg that one reason for this export surge is the increased demand for high-tech equipment required for AI-related products, which is putting pressure on suppliers. Furthermore, there is a rapid growth in the number of data centers. Due to the high demand for advanced products, Chinese companies are increasing their imports of electronics from India.
For India, this sudden growth contributes to increasing production capacity and solidifying Indian companies in the international supply chain. These changes are occurring parallel to efforts by India and Beijing to improve long-standing strained relations, as well as in line with changes in US tariff strategy, giving both Asian powers an incentive to deepen trade ties.
Pankaj Mohindru, President of the Indian Mobile and Electronic Industries Association, told Bloomberg that this data shows that the Indian manufacturing sector is beginning to gain reliability in one of the most competitive global value chains. Arun Kumar Garodia, MD of Corona Steel Industry Private Limited, noted to Bloomberg that despite a small profit relative to the total trade volume, it signals that China is opening its doors to Indian exports amidst broad geopolitical tensions.
Despite the recent growth, China still accounts for a small share of India's total exports. In the fiscal year ending in March, China's share in India's total exports was 4.4%, slightly higher than 3% the previous year, while the US remains India's largest market with a share of about 20%. This growth has not led to significant changes in the deep trade imbalance between the two economic powers. During the fiscal year ending in March, India imported goods from China worth $131.6 billion, accounting for about 17% of total imports and exceeding China's sales volume.
It is expected that the growth rate will be maintained not only in the technology segment but also in other industries. Exports of engineering goods to China, including machinery, automotive parts, hand tools, and components, grew by approximately 21% from April to August compared to last year.
