Exports from India to China increased by almost one-third to reach $12.22 billion during the April-November 2025 period, marking a significant surge in bilateral trade. The most notable reason for this recent increase is the 50% tariff imposed by the United States on Indian goods, which has prompted India to diversify its trade partnerships. Since the tariffs, India has actively sought to strengthen trade relations with other nations, resulting in increased exports to China and beyond. Besides China, India is also expanding its trade footprint with countries such as the United Arab Emirates, European Union nations, Oman, and New Zealand.
In November alone, exports to China jumped by 90%, reaching $2.2 billion, driven primarily by increased shipments of petroleum, electronics, and marine products. Petroleum exports experienced the highest growth, rising by 121.25% to $1.62 billion, fuelled by rising global oil prices and increased refining capacity in India. Electronics exports surged by 158.95% to $1.35 billion, supported by the domestic electronics manufacturing push and diplomatic trade initiatives. Marine product exports increased by 19% to $0.85 billion, with seafood exports, especially shrimp and fish, contributing significantly. Additionally, exports of oilseeds, mica, coal, and other commodities played crucial roles in boosting overall exports to China. This upward trend in exports to China underscores a shifting dynamic in China’s international trade relations, with its trade with the United States weakening and its partnership with India strengthening.
In 2017, China’s exports to the US represented approximately 19% of its total exports, a figure that had declined to 10% by November this year. Correspondingly, US imports from China, which made up about 20% in 2017, decreased to 9% in November, reflecting a broader reconfiguration of global supply chains.
Recent data from the global rating agency S&P Global indicates that the HSBC Flash India Composite Output Index fell to 58.9 in December from 59.7 in November, marking the slowest growth pace since February. This index measures month-on-month changes in India’s manufacturing and services sectors, where a reading above 50 signals expansion. Despite the slowdown, export demand from countries such as Australia, Bangladesh, Canada, Germany, the Middle East, Sri Lanka, and the UK accelerated, reaching a three-month high in December. The manufacturing sector experienced its slowest growth in two years, leading to limited employment creation, while the services sector saw no significant job growth, highlighting ongoing challenges in workforce expansion.
According to comprehensive data released by the Ministry of Commerce and Industry, the wholesale price index (WPI) based wholesale inflation rate was recorded at -0.32% in November. This marked an improvement from the 27-month low of -1.21% observed in October.
The easing of deflation contributed significantly to the reduction in wholesale inflation, while retail inflation increased to 0.71% in November from a record low of 0.25% in October. Deflation refers to a sustained decrease in the overall price levels of goods and services, resulting in an increase in the purchasing power of money.
In such a scenario, consumers can buy more goods and services with the same amount of money. Conversely, inflation represents a rise in prices, which can hinder economic growth when it becomes excessive. Responding to low inflation levels, the Reserve Bank of India (RBI) implemented a series of four repo rate cuts since February 2023, totalling a reduction of 1.25 percentage points. These cuts have lowered bank loan interest rates across the economy, encouraging more borrowing, boosting savings and consumption, and ultimately stimulating economic activity.
After the rationalization and streamlining of Goods and Services Tax (GST) rates implemented in September, a notable surge in consumption has been observed. This upward trend is expected to continue over the next few quarters, with demand increasing across various product categories. Rural areas are currently experiencing higher growth rates in demand compared to urban centres; however, urban demand is projected to pick up as urban consumers traditionally spend more on food, travel, and entertainment.
Additionally, the application of a uniform 5% GST rate on most fast-moving consumer goods (FMCG) has made products more affordable, enabling consumers to save more and increasing their overall expenditure. The resilience of the Indian economy has led major international financial institutions to project optimistic growth forecasts.
The International Monetary Fund (IMF) estimates India’s GDP growth at 6.6% for the current fiscal year, while the Asian Development Bank (ADB) revised its forecast upwards from 6.5% to 7.2%. The ADB attributes India’s accelerated growth to successful GST implementation, broad-based tax reforms, and a sharp rise in consumption levels. Stable government policies, robust domestic demand, increased government investment in infrastructure projects, foreign direct investment from multinational corporations, rapid employment generation, and a thriving stock market are anticipated to drive unprecedented economic growth from 2026 to 2035.
Furthermore, India is gradually mitigating the adverse impact of the 50% tariffs imposed by the United States on certain exports. Strengthened trade relations with China and other countries have helped offset these effects. The simplification and rationalization of GST slabs have increased household savings and discretionary spending.
The low inflation environment and successive repo rate cuts from the RBI are fuelling economic expansion. Consequently, global rating agencies are projecting even faster GDP growth for India in the coming years. Overall, these developments suggest that India’s economy will remain resilient and continue its structural growth trajectory into 2026.
Satish Singh serves as a Senior Banking and Economic Columnist located in Mumbai.The insights presented in the article reflect his personal viewpoints and analysis.
