NEW DELHI, Oct. 16 -- India's merchandise exports to the United States rose more than 11 per cent during the first six months of the current financial year despite tariff-related uncertainties, even as the country's widening trade deficit with China highlighted a growing imbalance in its commercial relations with the two economic powers.
According to the latest figures released by the Ministry of Commerce and Industry, India's exports to the US increased to $50.81 billion during April-September 2026-27 from $45.73 billion in the corresponding period last year, registering growth of approximately 11.1 per cent. However, imports from the US increased at a faster pace of nearly 26 per cent, reaching $32.33 billion against $25.66 billion a year earlier. Consequently, India's merchandise trade surplus with the US narrowed to $18.48 billion from $20.07 billion during the corresponding six-month period last year. The figures indicate that bilateral trade continued to expand despite uncertainty surrounding Washington's tariff policies and ongoing negotiations for a proposed India-US trade agreement.
At the same time, China overtook the United States as India's largest trading partner during April-September, with bilateral merchandise trade reaching $91.76 billion, compared with $83.14 billion with the US. India's merchandise trade with China surged nearly 29 per cent to $91.76 billion during the first half of 2026-27, compared with $71.24 billion in the corresponding period of the previous financial year. Imports from China accounted for the overwhelming share of this trade. India imported goods worth approximately $80.35 billion from China during April-September, while exports to the neighbouring country stood at $11.41 billion. This resulted in a merchandise trade deficit of about $68.94 billion with China during the six-month period. In comparison, the trade deficit with China stood at approximately $54.48 billion during April-September 2025-26.
The widening deficit reflects the continued imbalance between India's imports from China and its exports to the country. China remains a major supplier of electronic components, industrial machinery, chemicals and other intermediate goods used by Indian manufacturers. Although Indian exports to China also recorded substantial growth, they remained significantly below the value of imports.
India's exports to China increased by approximately 36 per cent to $11.41 billion during April-September 2026-27 from $8.38 billion a year earlier. However, the increase in exports was insufficient to offset the much larger volume of imports. The data illustrate the contrasting nature of India's trade relationships with its two largest commercial partners. While India continues to maintain a merchandise trade surplus with the United States, it runs a substantial deficit with China. The US also remained India's largest individual export destination, despite China moving ahead in terms of overall bilateral trade.
India's merchandise exports to the US continued to grow despite the trade disruptions and uncertainty created by American tariff measures. The increase is significant because Indian exporters have faced concerns over their competitiveness relative to manufacturers in countries such as Vietnam, Bangladesh and Indonesia. Higher tariffs can affect the prices of Indian products in the American market, potentially influencing purchasing decisions by US importers. Nevertheless, the latest figures suggest that demand for Indian goods has remained resilient across several sectors. Electronics, engineering goods, chemicals and petroleum products have contributed to India's broader export performance. Commerce Secretary Rajesh Agrawal said negotiations for the proposed India-US trade agreement were progressing in the right direction, with both sides working towards concluding the agreement at the earliest.
The first phase of the proposed agreement is nearing completion, although questions concerning tariff treatment and market access remain important elements of the negotiations. Separate figures released by China's General Administration of Customs show that India's exports to China increased 40.7 per cent to $19.26 billion during January-September 2026. However, imports from China rose 23.3 per cent to $125.19 billion during the same nine-month period, resulting in a trade deficit of $105.93 billion, up 20.7 per cent from a year earlier. The figures underline the scale of India's dependence on Chinese imports, particularly industrial inputs and manufactured goods.
Even substantial percentage increases in Indian exports have had a limited impact on the deficit because imports begin from a much larger base. For the financial year 2025-26, India's trade deficit with China stood at approximately $112.6 billion, with imports reaching $131.63 billion against exports of $19.47 billion. The latest figures suggest that the imbalance remains a significant economic challenge despite improved export performance.
Economic experts have cautioned that higher export values do not necessarily translate into proportionately greater profits or employment. Sohom Banerjee, a senior economic and AI expert, said the quality of export growth deserved as much attention as the overall figures. He pointed out that export earnings alone do not reveal how much value is generated domestically, the margins retained by Indian companies or the employment supported by additional shipments. Exporters may absorb higher costs or offer discounts to retain overseas customers, limiting the financial benefits of increased shipments. The electronics sector presents a similar challenge, as higher exports can coexist with substantial dependence on imported components. Banerjee stressed the importance of strengthening domestic manufacturing capabilities while ensuring that businesses continued to have access to essential industrial inputs. India's overall merchandise exports increased 18.51 per cent to $259.89 billion during April-September 2026-27, compared with $219.30 billion in the corresponding period last year. Merchandise imports rose to $437.53 billion from $376.17 billion, resulting in a trade deficit of $177.64 billion against $156.88 billion a year earlier.
In September alone, merchandise exports reached $44.40 billion, registering year-on-year growth of approximately 23 per cent. Imports stood at $74.61 billion, leaving a monthly merchandise trade deficit of $30.21 billion. Electronic goods emerged as a major contributor to export growth, with shipments rising 70.44 per cent to $5.31 billion in September. The broader trade figures indicate that India's export performance has strengthened despite global uncertainties, although imports have also increased substantially. The contrasting trade figures for the United States and China highlight two major priorities for India's economic policy.
With the US, the immediate challenge is maintaining export competitiveness while negotiating favourable tariff and market-access conditions. With China, the longer-term issue is reducing dependence on imported manufactured goods and expanding India's ability to supply products currently sourced from Chinese companies. Experts have emphasised the need for affordable export credit, timely tax refunds, reliable logistics and improved compliance with international product standards. At the same time, efforts to reduce dependence on Chinese imports would require stronger domestic manufacturing without disrupting industries that rely on imported machinery and components. The latest figures show that India is selling more goods to both the United States and China, but the economic outcomes remain markedly different. While trade with the US continues to generate a surplus, the expanding deficit with China remains a major concern for India's external trade position.
Published by HT Digital Content Services with permission from Millennium Post.