US remains India's top trading partner in FY25; China trade gap widens ahead of tariff impact

This comes ahead of the full impact of the tariffs imposed by US President Donald Trump on Chinese goods

For the fourth straight year, the US has emerged as the largest trading partner of India with bilateral trade valued at $131.84 billion in FY25. However, despite some restrictions on Chinese goods, New Delhi's trade deficit with Beijing has widened 17 percent to $99.2 billion in the same period, according to the government data.

In a major concern, India's exports to China dropped 14.5 percent in FY25 to $14.25 billion compared to $16.66 billion in FY24. In contrast, the imports jumped by 11.52 percent in FY25 to $113.45 billion against $101.73 billion in FY24.

China continues to be the second largest trading partner of India with $127.7 billion two-way commerce in 2024-25 as compared to $118.4 billion in 2023-24.

This comes ahead of the full impact of the tariffs imposed by US President Donald Trump on Chinese goods. Earlier in April, Trump had also announced tariffs on all the major economies, including India before announcing a temporary pause in a dramatic U-turn, providing major relief to global trade.

However, the full impact of a whopping 145 percent tariff on Beijing and its good will be known in the coming few months. There are concerns that Chinese firms could resort to dumping of goods in markets such as India and others, which could potentially widen the trade gap further.

According to the commerce ministry data, China was India's top trading partner from 2013-14 till 2017-18 and also in 2020-21. Before China, the UAE was the country's largest trading partner. The US has been the largest partner since 2021-22.

During the last fiscal, the UAE with $100.5 billion was the third largest trading partner of India.

In the last fiscal, India's exports to the US rose by 11.6 percent to $86.51 billion as against $77.52 billion in 2023-24. The imports were up by 7.44 percent in 2024-25 to $45.33 billion against $42.2 billion in 2023-24.

The trade surplus with America has touched $41.18 billion in the last fiscal from $35.32 billion in 2023-24.

In 2024, India's main exports to the US included drug formulations and biologicals ($8.1 billion), telecom instruments ($6.5 billion), precious and semi-precious stones ($5.3 billion), petroleum products ($4.1 billion), gold and other precious metal jewellery ($3.2 billion), ready-made garments of cotton, including accessories ($2.8 billion), and products of iron and steel ($2.7 billion).

Imports included crude oil ($4.5 billion), petroleum products ($3.6 billion), coal, coke ($3.4 billion), cut and polished diamonds ($2.6 billion), electric machinery ($1.4 billion), aircraft, spacecraft and parts ($1.3 billion), and gold ($1.3 billion).

The bilateral trade between India and the US is expected to get a boost in the coming years as both are negotiating a trade agreement. The aim is to increase two-way commerce in goods and services to $500 billion by 2030 from $191 billion at present.