India and China Trade at Record Highs While the World Watches Carefully

India and China quietly crossed an important commercial milestone in 2025, even as strategic tensions continued to dominate headlines, with bilateral trade reaching a record USD 155.6 billion, reflecting a 12 percent year on year increase and reinforcing the reality that economic gravity often moves faster than diplomacy.

Chinese Ambassador Xu Feihong confirmed that Indian exports to China grew by 9.7 percent during the year, a notable improvement at a time when global trade growth remained uneven and supply chains continued to realign across Asia and Europe.

China retained its position as India’s largest trading partner, driven by sustained demand for electronics, machinery, industrial components, chemicals, and renewable energy inputs, while India’s export basket to China remained concentrated in pharmaceuticals, iron ore, organic chemicals, marine products, and select agricultural commodities.

Despite the positive headline numbers, the structure of trade tells a more nuanced story, as India’s trade deficit with China continues to widen, underscoring the country’s deep reliance on Chinese manufacturing scale and cost efficiency, particularly in sectors that underpin India’s own industrial expansion.

What makes the current phase particularly relevant for business leaders is the geopolitical recalibration taking place alongside these figures, with India resuming tourist visa issuance for Chinese citizens, restoring direct flights, and signaling a controlled normalization of people to people and commercial flows following the Xi Jinping and Narendra Modi meeting in Tianjin last August.

For corporate decision makers, this moment is less about ideology and more about leverage, market access, and timing, especially as China moves swiftly on trade diplomacy following its engagement with the European Union, while India evaluates pathways to balance supply chain security with cost competitiveness.

There is also a strategic undertone that cannot be ignored, as deeper economic engagement with China strengthens India’s negotiating position globally, including in conversations with the United States, where trade talks have moved slowly and unpredictably.

The data makes one point clear for businesses operating across Asia, as trade pragmatism is once again asserting itself, and companies that understand how to operate within this evolving India China commercial corridor will be better positioned to manage risk, pricing power, and long-term growth in an increasingly fragmented global economy.

What this means next remains open to interpretation.

Will rising trade volumes translate into deeper market access and a more balanced trade structure for India, or will dependence on Chinese manufacturing continue to grow despite diversification efforts. For businesses and investors navigating Asia’s shifting trade landscape, the real question is not whether India and China will trade more, but how this relationship will be shaped, managed, and priced in the years ahead.