India Selling More To US Despite Tariffs, But China Trade Gap Keeps Rising

India's shipments to the United States are rising despite tariff-related disruptions. Simultaneously, exports to China are growing even faster, but the trade deficit with Beijing continues to widen.

So, if India is selling more goods to both countries, why is one relationship proving resilient while the other is adding to the country's trade imbalance?

The latest figures offer a clue. India's merchandise exports to the US reached $50.81 billion during April-September 2026, up from $45.73 billion a year earlier. This is an increase of about 11.1 per cent, according to the latest trade figures reported by the government.

China presents a different picture. India's exports to the neighbouring country surged 40.7 per cent to $19.26 billion during January-September 2026. But imports from China rose 23.3 per cent to $125.19 billion. The result was a trade deficit of $105.93 billion, up 20.7 per cent from a year earlier.

India-US Trade: Exports Grow Despite Tariff Pressures

The rise in exports to the US is significant because Indian businesses have faced uncertainty over American trade policy. The first phase of an India-US trade deal is nearing completion, but negotiations have involved questions about tariff rates and whether Indian exporters will enjoy an advantage over competitors such as Vietnam, Bangladesh and Indonesia.

According to a Reuters report, the proposed deal has reduced the announced tariff burden from the earlier 50 per cent level to 18 per cent, although finalisation remained pending. Now, the latest export numbers suggest that US demand for Indian goods has not disappeared despite tariffs. But they do not, by themselves, prove that tariffs have had little impact. Exports might have grown even faster without the additional costs, while some businesses could have absorbed lower margins to retain customers.

India's overall merchandise exports rose 18.51 per cent to $259.89 billion during April-September 2026-27, compared with $219.30 billion in the corresponding period a year earlier. This was faster than the 11.1 per cent growth in exports to the US. In other words, US-bound shipments are increasing, but they are growing more slowly than India's merchandise exports as a whole.

Electronics, petroleum products, chemicals and engineering goods have helped drive the wider export expansion. Electronics exports alone rose 70.44 per cent year on year to $5.31 billion in September, according to the Ministry of Commerce.

India-China Trade: Why The Deficit Keeps Growing

The China story is more complicated. India is exporting more to its neighbour, but it is importing far more. According to China's General Administration of Customs, India's exports to China reached $19.26 billion in January-September 2026. Imports from China, however, stood at $125.19 billion. The gap between the two was $105.93 billion.

The deficit is not new. India's trade gap with China stood at $112.6 billion in 2025-26 as imports rose to $131.63 billion while exports reached $19.47 billion.

The key issue is the size of the two trade flows. Even when exports rise sharply in percentage terms, they may not be large enough to offset imports that are many times higher. China supplies India with electronics, machinery, chemicals and other industrial inputs. These products feed into Indian manufacturing, infrastructure and consumer markets. India, meanwhile, sells a smaller basket of goods to China, including ores, fuels, seafood and agricultural products.

This creates a structural challenge. Indian businesses can sell more to China and still see the trade deficit widen if imports remain much larger. For example, a 40.7 per cent increase in exports sounds substantial. But India's exports to China were only $19.26 billion during the first nine months of 2026, against imports of $125.19 billion. The difference in the starting values matters as much as the growth rates.

US vs China: What The Latest India Trade Numbers Show

The figures below cover different periods because India's official trade data follows the April-March financial year, while the latest China figures cited here cover the January-September calendar period.

What The Numbers Mean For India

Sohom Banerjee, senior economic and AI expert, told NDTV that the quality of export growth matters as much as the headline numbers. "The economic quality of this growth deserves equal scrutiny. Gross export receipts reveal little about the margins retained by Indian firms, the domestic value added within their products, or the employment supported by additional shipments."

He also pointed out that higher exports do not automatically translate into proportionately higher profits or more jobs. Businesses may offer discounts to retain overseas buyers, while some of the additional costs associated with tariffs may be absorbed by exporters or passed on to importers and consumers. India's electronics sector illustrates both the opportunity and the challenge. Rising shipments can lift export earnings, but the long-term gains will depend partly on how much of the product is manufactured domestically, rather than assembled using imported components.

Banerjee said India should use its export resilience to strengthen its negotiating position and productive capabilities. He also highlighted the importance of affordable export credit, timely tax refunds, reliable logistics and help with meeting international standards. The same logic applies to trade with China. Expanding exports is useful, but reducing the deficit will also require Indian businesses to become more competitive in products that China currently supplies in large quantities.

However, this does not mean India should simply stop importing Chinese goods. Machinery, components and industrial materials can support domestic production. "The challenge is to build stronger Indian suppliers without disrupting businesses that depend on these inputs," said Banerjee.