India’s economic story over the last ten years has been full of big promises like Make in India, Atmanirbhar Bharat (Self-Reliant India), and Swadeshi (homegrown production). These were started during global problems like COVID-19 to boost local making and cut down on buying from abroad. But they show clear problems, as critiques point out their use of tricks and hollow words.
As trade between India and China grows to $127.71 billion in FY 2024-25—up from $74.3 billion in FY 2014-15—the trade gap with China has grown from $46.68 billion to a high of $99.25 billion. This gap makes up more than 35% of India’s total $282.83 billion goods trade shortfall.
This unevenness comes not only from buying raw materials but from a growing “kit-and-assemble” system. In this, India brings in high-value parts from China (70-85% of smartphone components, 65-70% of drug active ingredients) and adds very little local value (15-23% in electronics).
Experts say this cover-up hides twisted data—like overblown GDP growth from rich-led gains and hidden falls in the informal sector—while small shops and medium-small enterprises suffer from cheap Chinese goods flooding in and government favoritism to “Govt Buddies“. With early FY 2025-26 data showing a six-month gap of $53 billion as of September 2025, the talk of being self-sufficient falls apart due to deep-rooted needs.
Two-Way Trade Patterns: A Growing Divide
India’s sales to China stay focused on raw items, hitting a top of $21 billion in 2020 before dropping to $14.25 billion in 2024, and clocked at $8.5 billion for April-September 2025 (up 19% from last year). Buys from China, on the other hand, have jumped from $58 billion in 2014 to $113.5 billion in 2024, with September 2025 figures at around $61.5 billion (up 15%). This unevenness, worsened by China’s extra supply in electronics and machines, has pushed the gap to $99.25 billion in 2024, up from $46 billion ten years back. Causes include hidden blocks in China that hurt Indian drug and farm sales, plus India’s weakness to supply breaks—China gives 30% of factory goods, up from 21% in 2010.
In recent years, the patterns show clear shifts. In FY 2023-24, exports to China were $16.65 billion, imports $101.75 billion, leading to a $85.10 billion deficit. For FY 2024-25, exports fell to $14.25 billion (down 14.4%), while imports rose to $113.50 billion (up 11.5%), widening the gap to $99.25 billion. Early FY 2025-26 (April-September) saw exports at $8.50 billion (up 19.0% from the same period last year), but the deficit hit $53 billion.
Overall Trade Gaps: China Leads The Shortfalls
India’s total goods trade deficit has ballooned from $137 billion in FY 2014-15 to $282.83 billion in FY 2024-25, with early FY 2025-26 (April-September) already at $148.20 billion. The top three countries driving this deficit are China ($99.25 billion in FY 2024-25), Russia ($55 billion), and the United Arab Emirates ($28.50 billion). Back in FY 2014-15, the leaders were China ($46.68 billion), Saudi Arabia ($20.15 billion), and Switzerland ($12.40 billion).
On the surplus side, India’s trade wins have shrunk from $76.45 billion in FY 2014-15 to $45.67 billion in FY 2024-25, with April-September 2025-26 at $22.30 billion. The top three surplus partners now are the United States ($40.82 billion in FY 2024-25), the Netherlands ($17.40 billion), and the United Kingdom ($14.20 billion), compared to the USA ($22.60 billion), UAE ($10.80 billion), and Hong Kong ($8.50 billion) in FY 2014-15.
Key Goods In Trade: Heavy Reliance On Chinese Imports
India’s top three exports to China in FY 2024-25 were iron ore ($7.20 billion), organic chemicals ($2.50 billion), and marine products ($1.80 billion), making up a big part of the $14.25 billion total. In FY 2014-15, these were iron ore ($5.40 billion), organic chemicals ($1.90 billion), and cotton ($1.20 billion) out of $13.97 billion.
For imports, the top three from China in FY 2024-25 were electronics ($45.60 billion), machinery ($32.10 billion), and chemicals ($18.40 billion), totaling over $113.50 billion. This is a jump from FY 2014-15’s top items: electronics ($20.80 billion), machinery ($15.60 billion), and chemicals ($9.20 billion) out of $60.33 billion.
Recent Sectoral Shifts: Electronics And Pharma Lead The Way
Looking at just the latest periods, electronics imports from China jumped 22% in FY 2024-25 to $45.60 billion from $37.40 billion in FY 2023-24, with April-September 2025-26 at $24.80 billion (up 18%). Pharma APIs rose 15% to $18.40 billion in FY 2024-25 from $16.00 billion, and partial 2025-26 at $9.50 billion (up 12%). Meanwhile, exports in these areas stayed flat or fell, with electronics sales at $1.20 billion in FY 2024-25 (down 5%) and pharma at $0.80 billion (flat).
The Self-Reliance Myth: Policies That Don’t Deliver
Programs like Production Linked Incentives (PLI) promised $100 billion in local output by 2025 but delivered only $20 billion by mid-2025, mostly in mobiles where China still supplies 75% of parts. Import duties on Chinese goods rose to 20-30% in key sectors, yet smuggling and re-routing via Vietnam cut real impact by 40%. MSME growth in manufacturing stalled at 12% of GDP, as Chinese FDI inflows hit $4.5 billion in 2024 despite border tensions.
Looking Ahead: Breaking The Cycle? A Harsh Reckoning With Entrenched Dependencies
As India’s trade deficit with China barrels toward a projected $110 billion by FY 2026, fueled by relentless import surges in electronics and pharmaceuticals while exports languish in raw material ruts, the hollow echoes of self-reliance ring louder than ever. This isn’t mere economic oversight; it’s a damning indictment of policies that prioritize flashy assembly lines over genuine innovation, leaving the nation shackled to a “kit economy” that masquerades as progress but delivers only superficial gains at the cost of strategic vulnerability and economic coercion.
The failures of Make in India and Atmanirbhar Bharat aren’t accidental; they’re baked into a system that fudges metrics to inflate GDP contributions from consumption (now a dubious and debt based 55%) while concealing the collapse of the informal sector and the ration-dependence of 81 crore Indians scraping by on less than $3 a day. The PLI scheme, with its $13 billion funneled into electronics, has enriched “Govt Buddies” like Foxconn, who profit minimally from slapping together Chinese-sourced kits, while small and medium enterprises (MSMEs)—the supposed backbone of manufacturing—wither under the flood of cheap Chinese dumping and non-tariff barriers that quietly throttle Indian pharma and agri-exports to China. Manufacturing’s share of GDP clings stubbornly at 11-15%, growing at a pathetic 4% annually, a far cry from the transformative leaps promised a decade ago.
Geopolitically, this dependency is a ticking bomb. With China commanding 30% of India’s industrial imports and looming threats like the Brahmaputra dam project, India risks supply chain strangulation amid border skirmishes. Add the U.S.’s escalating tariffs—50% on smartphones, 20-100% on pharma—and a $46 billion surplus with America hangs by a thread, exposing 100 crore citizens to cascading economic insecurity. Self-reliance? It’s a cruel joke when R&D spending idles at 0.7% of GDP against China’s 2.4%, ensuring that 70-85% of smartphone parts and 65-70% of APIs remain Chinese lifelines, with semiconductors alone sucking in over $100 billion yearly, 70% from China and Hong Kong.
To shatter this cycle demands more than platitudes: a ruthless overhaul starting with tripling R&D to 2-3% of GDP to foster true domestic innovation in APIs and chips, slashing reliance on China to 40% by 2030 through targeted incentives for local production. Trade diversification must accelerate—deepening ties with Vietnam and Bangladesh for apparel and footwear, prying open EU markets for high-value exports, and aggressively negotiating against China’s export curbs on Indian goods. But transparency is the real battleground: ditch the data distortions, mandate independent audits of self-reliance metrics, and redirect subsidies from crony conglomerates to MSMEs, empowering the informal workforce that powers 90% of employment.
Without this reckoning—especially as elections loom and political expediency favors short-term deals with Chinese suppliers—the dream of Atmanirbhar Bharat dissolves into a nightmare of perpetual deficits and eroded sovereignty. For a deeper dive into these stark realities, explore this full analysis by International Trade segment of ODR India.