China appears to have emerged an integral part of India’s manufacturing supply chain, exporting close to $130 billion of industrial goods to India in FY26, a report published by trade intelligence firm GTRI has observed.

Even as it accounted for around 16 per cent of India’s total imports, China’s dominance is significantly higher in industrial goods, supplying as much as 30.8 per cent of the country’s requirements.

Four sectors — electronics, machinery, computers, and organic chemicals —were the largest recipient of Chinese imports. Together, they accounted for 66 per cent of India’s total imports from China, valued at $82.6 billion.

Contrary to popular perception, non-industrial or consumer goods accounted for 1.5 per cent of Chinese imports of $131.63 billion, while the 98.5 per cent was in industrial goods.

China accounts for 43 per cent of India’s electronics imports, 40 per cent of machinery and computer imports, and 44 per cent of organic chemicals.

“These are not discretionary purchases but core inputs that feed directly into India’s manufacturing ecosystem,” Global Trade Research Initiative (GTRI) founder Ajay Srivastava observed.

The report observed that India’s trade relationship with China is becoming increasingly one-sided, with imports surging even as exports struggle to recover.

In FY26, India’s exports to China stood at $19.5 billion — still below the $21.2 billion recorded in FY21. Imports, by contrast, have more than doubled over the same period, rising from $65.2 billion to $131.6 billion.

The result is a sharply widening trade deficit, which has expanded from $44 billion to $112.1 billion — a 155 per cent increase in just five years.

“This dependence is less about consumption and more about weak domestic production. Indian industry relies heavily on Chinese inputs — electronics parts, EV batteries, solar modules, APIs and specialty chemicals — that are hard to replace at scale. As a result, even as India tries to grow exports, its supply chains remain tied to China,” Srivastava observed.

As a result, dependence on a single supplier for critical inputs leaves sectors like pharmaceuticals, electronics and clean energy poses risks, whether geopolitical or commercial.

The report cautioned that if Chinese investments to India is allowed without strong local sourcing rules, India may get assembly plants but not deep manufacturing.

“India needs a clear diversification strategy: build domestic capacity, attract non-China suppliers, and keep single-country dependence below 30 per cent in critical sectors,” GTRI prescribed.