India’s Exports to US Rise 11.1% Despite Tariffs, While Trade Deficit With China Widens

India’s merchandise exports to the United States increased by 11.1% to $50.81 billion during April–September 2026, showing continued demand for Indian goods despite uncertainty over American tariffs. However, the country’s trade relationship with China presents a different challenge: although Indian exports to China have risen sharply, imports have grown so much larger that the trade deficit continues to expand.

The latest trade figures highlight two contrasting trends for the Indian economy. Trade with the US continues to generate an export surplus, while the widening imbalance with China reflects India’s substantial reliance on Chinese products, industrial components and machinery.

During April–September 2026, India’s exports to the US increased from $45.73 billion in the corresponding period a year earlier to $50.81 billion. Meanwhile, exports to China reached $19.26 billion during January–September 2026, representing year-on-year growth of 40.7%.

Despite the faster growth in shipments to China, the difference between exports and imports remains substantial.

India-US Trade Holds Up Despite Tariff Uncertainty

Indian exporters have faced uncertainty over US trade policy, including the potential effect of higher tariffs on the competitiveness of their products. Yet the latest figures indicate that shipments to the American market continued to rise during the first half of the financial year.

India recorded merchandise exports worth $259.89 billion during April–September 2026-27, an increase of 18.51% from $219.30 billion in the same period a year earlier. This means exports to the US grew more slowly than India’s overall merchandise exports.

The proposed India-US trade agreement is another important factor for businesses. Negotiations over the arrangement have involved tariff rates and the competitive position of Indian suppliers relative to exporters from countries such as Vietnam, Bangladesh and Indonesia.

While the increase in exports suggests that American demand for Indian products remains resilient, it does not establish that tariffs have had no effect. Exporters may have absorbed additional costs or accepted lower profit margins to preserve their market share.

Electronics, engineering goods, chemicals and petroleum products have contributed to India’s broader export expansion. Electronics exports, in particular, recorded strong growth, pointing to opportunities for Indian manufacturers in international markets.

Why India’s Trade Deficit With China Is Growing

India’s trade figures with China reveal a more persistent structural imbalance. Indian exports to China climbed 40.7% to $19.26 billion during January–September 2026. However, imports from China rose 23.3% to $125.19 billion over the same period.

The resulting trade deficit reached $105.93 billion, up 20.7% from a year earlier.

The gap is driven largely by the difference in the scale of imports and exports. Even when Indian exports register substantial percentage growth, they may not be sufficient to offset imports that are several times larger.

China supplies India with a wide range of goods, including electronics, machinery, chemicals and industrial inputs used by manufacturers. These products support domestic production, infrastructure development and consumer demand.

India’s exports to China, meanwhile, include products such as ores, fuels, seafood and agricultural goods. Expanding these shipments could help narrow the gap, but the challenge is significant given the existing difference in trade volumes.

The deficit is not a new development. India’s trade gap with China stood at $112.6 billion in the 2025-26 financial year, reflecting the long-standing imbalance between the two economies.

What the Trade Numbers Mean for Indian Businesses

The contrasting figures suggest that export growth alone is not enough to measure the strength of India’s international trade position. Profit margins, domestic manufacturing content and employment generated by additional shipments also matter.

For example, stronger electronics exports can benefit Indian industry, but the long-term gains depend partly on how much of the product is manufactured locally rather than assembled using imported components.

Reducing the trade deficit with China will require Indian businesses to improve their competitiveness in products that currently rely heavily on Chinese suppliers. At the same time, abruptly restricting imports could disrupt manufacturers that depend on machinery, components and industrial materials from China.

Improving logistics, access to export finance, tax-refund timelines and compliance with international standards could help Indian exporters compete more effectively.

The latest data therefore presents a mixed picture: India is increasing sales to major overseas markets, including the US, but its growing dependence on Chinese imports remains a major trade challenge. Sustained export growth and stronger domestic production capabilities will be central to improving that balance.