India Grapples With Chinese Puzzle: 'Top Trade Partner' Also 'Primary Adversary'
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Due to ongoing border tensions, surveillance concerns, and geopolitical tussles, the Modi government has tightened FDI rules, banned Chinese apps, and promoted 'Atmanirbhar Bharat'
The United States' 2025 Defence Intelligence Agency (DIA) threat assessment identifies China as India's 'primary adversary", relegating Pakistan to a secondary security concern. However, this also reflects a strange juxtaposition of strategic rivalry and economic interdependence.
On the surface, the two Asian giants remain deeply intertwined through bilateral trade relations, and they are almost economically inseparable, despite a dwindling level of diplomatic trust.
The report states that India imports more from China than from any other country, with Chinese goods feeding everything from India's infrastructure to its consumer tech sector.
'Bilateral trade between India and China in FY24 stood at US$ 118.40 billion against US$ 113.83 billion in FY23 with a growth of 4%. According to the latest data from the Global Trade Research Initiative (GTRI), In FY24, China has once again become India's top trading partner, surpassing the United States after a two-year gap. In FY24, China had a 15.06% share in India's total imports. India imported goods worth US$ 675.42 billion from the world, including goods worth US$ 101.74 billion from China," stated a recent trade report of India Brand Equity Foundation (IBEF). 'China occupies the 22nd position in FDI equity inflows into India with a cumulative FDI amount of US$ 2.50 billion from April 2000-September 2024."
According to the report, India exported 4,186 commodities to China in FY24 while importing 7,521 commodities in the same period. 'India's export to China stood at US$ 16.65 billion in FY24 and US$ 15.30 billion in FY23," stated the report, while India's import from China stood at US$ 101.74 billion in FY24 and US$ 98.50 billion in FY23.
A senior government official said, 'This isn't merely a matter of macroeconomics. The trade relationship is not just resilient; it's systemic."
However, with simmering tensions over border issues, surveillance concerns, and competition for geopolitical influence, the Narendra Modi government has been managing this strategic issue. The government, now wary of Chinese investments in critical sectors, has tightened FDI rules, banned Chinese apps, and emphasised 'Atmanirbhar Bharat" (self-reliant India).
'We are in a position where our so-called adversary is also our supplier," said another official familiar with the current situation. 'Reducing economic dependency on China requires systemic capability-building across manufacturing, research, and our own supply chains. And that is a long road."
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First Published:
May 29, 2025, 07:26 IST
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