Trade: How India became dangerously addicted to Chinese imports

A visit to an Indian toy store illustrates a rare success in reducing reliance on China. After initial opposition from sellers who doubted local producers, raised tariffs and stricter quality rules helped domestic makers gain ground.

More widely, analysts say efforts to correct the trade gap have failed and dependence has grown. Kevin Zongzhe Li of the Asia Society Policy Institute said economic links deepened even when other ties were "at their lowest point".

Researcher Ajay Srivastava says China provides over 30% of India's industrial imports and more than 100 critical products, with the gap widening. Electronics make up 36% of incoming goods and machinery about 21.7%, the Observer Research Foundation reports.

The issue has returned to diplomacy after border clashes in 2020 soured relations. Following a recent thaw, India's prime minister and China's president met at September's Brics meeting in Delhi and promised action on "structural trade imbalances".

A key reason is that India needs Chinese inputs to manufacture, not only finished goods for consumers. Srivastava says output "depends heavily on imported components", leaving production largely focused on assembly.

Broader economic forces are also pushing Chinese goods outward at low prices. China's overall trade surplus is expected to exceed $1tn for a second year running, sustaining pressure on Indian industry.