Beijing has officially dethroned Washington as India’s largest trading partner. Commerce ministry data reveals that two-way trade with China jumped nearly 29% year-on-year to $91.76 billion in the first half of FY27. This figure decisively beats the $83.14 billion India traded with the US during the same period, marking a significant geopolitical and economic shift in New Delhi’s foreign commerce landscape.
The numbers tell a lopsided story. While India’s exports to China climbed 36% to $11.41 billion, imports from the eastern neighbor exploded by 27.82% to $80.34 billion. This imbalance pushed India’s trade deficit with China to a staggering $68.93 billion, up from $54.06 billion a year earlier. In contrast, trade with the US, though growing 16.5% to $83.14 billion, saw its surplus narrow to $18.49 billion as imports from America rose faster than exports.
New Delhi is scrambling to balance this dependency. Commerce and Industry Minister Piyush Goyal stated on Wednesday that India is actively working to rebuild its relationship with China, though he admitted the "last word" on the process remains unwritten. Commerce Secretary Rajesh Agrawal added that constant discussions are underway to improve trade ties, while simultaneously pushing to finalize the India-US trade agreement. "We anticipate closing the deal and signing it at the earliest possible time," Agrawal said, citing progress in the right direction despite broader US tariff framework uncertainties.
Beyond the major powers, trade patterns show sharp, uneven growth. Exports to Tanzania spiked 122.5% and to Singapore by 103%, while shipments to the UAE, Netherlands, and Saudi Arabia fell. On the import side, inflows from Oman jumped 210.9% and from Brazil by 143.13%. For September alone, merchandise exports hit $44.4 billion, a 23.04% increase, narrowing the monthly deficit to $30.21 billion. Agrawal remains optimistic, suggesting that if current momentum holds, India could push total merchandise exports beyond the $500 billion mark, a jump from the $442 billion recorded in 2025-26.
The next critical juncture lies in the Geneva talks and the finalization of the US tariff framework, which will determine if the US can reclaim its top partner status in the second half of the fiscal year. With the deficit with China widening and the US surplus shrinking, India’s trade strategy faces its most complex test yet.