top of page

By:

Archita Gaur

13 June 2026 at 8:55:13 pm

India’s China Dependence

India is trying to build alternatives to Chinese manufacturing while increasingly becoming a supplier within the same Asian production networks. AI generated image India’s economic relationship with China is becoming harder to describe in simple terms. New Delhi has spent years trying to reduce its dependence on Chinese imports, strengthen domestic manufacturing and build more resilient supply chains. Yet the latest trade trends point to a more complicated reality: India may be reducing some...

India’s China Dependence

India is trying to build alternatives to Chinese manufacturing while increasingly becoming a supplier within the same Asian production networks. AI generated image India’s economic relationship with China is becoming harder to describe in simple terms. New Delhi has spent years trying to reduce its dependence on Chinese imports, strengthen domestic manufacturing and build more resilient supply chains. Yet the latest trade trends point to a more complicated reality: India may be reducing some forms of dependence on China while becoming more deeply integrated with Chinese-linked production networks. This is not necessarily a contradiction. As India expands its electronics, engineering and manufacturing capabilities, its relationship with China could gradually shift from one dominated by finished-goods imports towards a more complex exchange involving components, intermediate goods and increasingly sophisticated Indian exports. The question, therefore, is no longer simply whether India can replace China. It is whether India can move high enough up the value chain to become an indispensable part of the Asian manufacturing ecosystem. For the world’s fastest-growing major economy, China is simultaneously a competitor, a supplier, a market and a critical link in global production networks. India’s challenge is to manage that interdependence without allowing it to become a strategic vulnerability. The shift is also taking place against a broader reordering of global supply chains. The pandemic, US-China tensions and growing concerns over the concentration of critical manufacturing in a handful of countries have encouraged multinational companies to adopt a ‘China plus one’ strategy. India is one of the principal beneficiaries of that diversification, but much of the new manufacturing capacity still depends on Chinese machinery, components and intermediate goods. Trade Deficit The scale of India’s dependence on China remains difficult to overlook. In FY2025–26, India imported $131.63 billion worth of goods from China, while its exports stood at just $19.47 billion, leaving a bilateral trade deficit of more than $112 billion. Electronics alone accounted for $49.21 billion of India’s imports from China, followed by machinery and electrical equipment worth $24.51 billion. Yet the more interesting development is happening on the other side of the ledger. India’s exports to China rose nearly 40 percent during the first five months of FY2026–27, reaching about $9.6 billion. Electronics and engineering goods were among the major drivers of this increase. Engineering goods exports to China also rose sharply in August, with shipments increasing by around 75 percent year-on-year to $424.65 million. The numbers are still too small to suggest that India’s trade imbalance with China is about to disappear. But they do point to something potentially more consequential: India is beginning to export more of the kinds of manufactured products that it has traditionally sought to build at home while importing heavily from China. That could mark the early stages of a different kind of relationship in which India is not merely a large consumer of Chinese manufacturing, but an increasingly relevant supplier within the same regional production ecosystem. The First Crack The clearest sign that India’s relationship with China may be changing is emerging in electronics. For years, the sector largely represented a one-way flow: Chinese components and equipment entered India, where they were assembled into products for domestic consumption or export. But that pattern is beginning to show an unusual reversal. India’s exports of printed circuit board assemblies (PCBAs) to China surged more than 40-fold in FY2025–26, from just $36 million to $1.5 billion. Nearly 80 percent of India’s total PCBA exports went to China, while overall Indian PCBA exports increased more than 20-fold to $1.9 billion. The numbers are still small compared with the broader bilateral trade relationship, and they should not be mistaken for evidence that India has suddenly become self-sufficient in electronics. India imported $46.4 billion worth of electronics from China in FY2025–26 alone. But the direction of trade is significant. Indian manufacturers are no longer participating in electronics supply chains only as assemblers dependent on imported Chinese inputs; some are beginning to supply intermediate products back into the Chinese ecosystem. That distinction matters because modern manufacturing is rarely about producing an entire product in one country. It is about occupying specific stages of a value chain. If Indian firms can become competitive suppliers of components, assemblies and specialised engineering products, India does not necessarily have to replace China to benefit from the reorganisation of global manufacturing. It needs to become a more valuable node within it. The rise in Indian electronics exports should not be mistaken for a broad-based reduction in dependence on China. In fact, the opposite is visible in several critical parts of the electronics supply chain. A recent analysis found that China supplied at least 80 percent of India’s imports across 71 electronics product lines in 2025–26, up from 44 product lines in 2018–19. The dependence is particularly concentrated in upstream components such as motors, cables and switching equipment. This reveals the central difficulty in India’s manufacturing strategy. Producing and exporting a finished or semi-finished electronic product is not the same as controlling the supply chain behind it. India has made considerable progress in assembly and is increasingly developing capabilities in areas such as PCBAs, but it remains reliant on imported components, machinery and other intermediate inputs. NITI Aayog has similarly noted that India’s electronics exports remain concentrated in final-assembly products, while the country continues to depend heavily on imports for critical components such as integrated circuits, semiconductors and batteries. The implication is important. India’s objective should not be to eliminate Chinese inputs overnight. Such an approach could make domestic manufacturing more expensive and less competitive. Instead, the longer-term challenge is to gradually build domestic capabilities in the layers of the value chain where dependence is greatest while continuing to participate in international supply chains where imports make economic sense. That is a more difficult strategy than simply replacing imports. It requires Indian firms to move from assembly to design, components, specialised manufacturing and eventually technology-intensive production. Only then can rising exports to China become evidence of a genuine shift in India’s position within global manufacturing rather than simply another layer of trade within an ecosystem that remains dominated by China. India’s relationship with China is unlikely to become a simple story of dependence followed by decoupling. The more realistic outcome is a gradual restructuring of that relationship. India can reduce vulnerabilities in critical sectors while remaining connected to the Chinese manufacturing ecosystem and, increasingly, becoming a supplier within it. For India, the objective should therefore not be to replace China at every stage of production. It should be to build capabilities that allow Indian firms to occupy more valuable stages of global supply chains. The surge in electronics and engineering exports to China may still be modest, but it points towards what that future could look like. The real measure of India’s manufacturing success will ultimately be whether it can move beyond assembling products to designing, supplying and exporting the components and technologies that make them possible. If it can do that, India will not have to choose between reducing its dependence on China and trading with China. It may be able to do both. (The writer is an economics postgraduate from Jawaharlal Nehru University with research interests in economic policy, trade and global governance. Views personal.)

Indian Shipbuilding A Must Win Marathon

Writer: Capt. Naveen S Singhal
Capt. Naveen S Singhal
Dec 5, 2024
4 min read
Shipbuilding

With a coastline of 7500 KM, it is hard to imagine, that for the first 20 years (1947-1967) India had no ‘shipping ministry’. In 1967 a Shipping ministry “coupled” with ROAD transport was established. Since then, this ministry has been on a name changing ride, not once, not twice but six times. In 2009 the “ROAD Transport and Highways” was de-coupled and ‘Shipping’ ministry was formed. Turning point came in 2015 with a clear maritime vision for 2030 and 2047. Ministry was re-christened, aptly to Ministry of “Ports, Shipping and Waterways” in 2020.


Why is Shipbuilding important for a country?

a. A Shipyard becomes an opportunity hub and like a queen bee requires the support of an industrial colony to manufacture machinery and equipment.

b. National Shipyards support fleet renewal needs of the Navy.

c. Contributes to national GDP, increases inflow of FOREX.


Korea shipbuilding is 8% of GDP. Japan’s automobile industry is 2.9% of GDP. India’s shipbuilding a meagre 0.000578% of GDP. In context, India’s pharmaceutical industry, ranked third largest in the world is 1.72% of India’s GDP.


International Shipbuilding Market

The market is estimated to reach around USD 200 billion by 2029, growing at a CAGR of 4.84%. While India is at bottom with 0.07% of world share, behind Philippines 1.5% and Vietnam 1%, however on the positive side, India has done well in taking care of its defence needs, with 37 of 39 Naval ships being built in India yards. Rear Admiral S Shrikhande researching on maritime as a Fellow at Wollongong University, Australia, says “Shipbuilding in India needs both, serious incentivisation and dogged determination and not harping on being a big ship breaking country. That Garden Reach shipyard has a $54 million order for merchant ships from a German owner, is a good sign.”


Were Shipyards of 20th century in Flight mode?

Prominent shipyards in India were built in the colonial period. Mazagon Dock 1774, Garden reach 1884, Hindustan shipyard 1941 to cater to British navy and merchant fleet needs. Cochin shipyard 1972, Adani Katupalli 2013, Reliance Naval and Engineering, Rajula Gujarat 1997 and others have limited capacity, hence a lot more work to do. Capt. Subhangshu Dutt (Singapore) a mariner and now a shipowner, says “GOI should hold hands in any collaboration till the marriage with the foreign entity is reasonably stable. He also suggests that “new shipbuilding sites should be given to existing successful shipyards since they have decades of experience and talent. Consortium of 3 or more parties may also be good idea”.


Shipbuilding GOLD

As per SPLASH report the demand for LCO2 carriers could reach 2,500 ships by 2050. As per other estimates, 40% of global fleet of ships could have wind propulsion by 2050. A surge in such vessels is due to an unparallel waves of decarbonization in the shipping industry. Demand for ships with ‘carbon neutral’ badges, such as Dual fuel, Wind assisted, Nuclear fuel ships, Hydrogen powered ships, Liquified CO2 (LCO2) carrier, is outstripping supply. A must in the ‘bucket list’ of every Shipyard. Pinning down a standard ROI in shipbuilding is not easy, but experts suggest it could range from 4% to 15% for the high demand ‘carbon neutral’ ships. While an LNG new build vessel could cost US$ 250 million upwards.


International collaboration

On China’s shipbuilding success story, Manoj Pandalanghat (Singapore) a mariner and ship owner believes that “China has around 50 active Shipyards. Each have a few large dry docks. In each dock two or more large vessels are built simultaneously. Thus, a single yard is able to roll out 2/3 vessels/month, 36 vessels/year and 50 shipyards roll out 1800 vessels/year”.


China could be a jaldi-5, but India needs a sturdy Mount Fiji. Besides technology, Japanese bring the most important hand baggage of soft-skills and culture, essential for success from keel laying to delivery. Maruti’s is a standing example.


Food for thought for New Delhi

a. Expertise: Hire Naval Architects and shipbuilding experts with current international experience.

b. Government assistance: Land, Financial support, subsidies and timebound clearances.

c. Monitoring: PMO should monitor the first 5 to 10 years till Shipbuilding takes-off on this long-haul flight to destination 2047.


India’s Shipbuilding is expected to grow to $237 billion by year 2047. On a back of the envelope calculations this works out to about 4% of India’s 2047 projected GDP of $ 5 trillion. While cars are driven on roads, however the Ministry of roads and transport has little to do with “Automobile manufacturing”. On a similar note, ‘Shipbuilding’ as an industry has little to do with Ports, Shipping and Waterways, thus it may be worthwhile to consider a separate ‘Ship-building’ wing in the Ministry of Ports, Shipping and Waterways headed by a dynamic cabinet rank minister. Since 2047 targets are stiff and an uphill task, so in all probabilities, the officials in Ministry of Ports, Shipping and Waterways are likely to push beneath the carpet, delays and failures of Shipbuilding with sweet success stories of “Ports, Shipping and Waterways” and if this does happen then India will not only miss the Shipbuilding bus of 21st century but a lot more from a national security and strategic perspective.


(The author is a Shipping and Marine consultant. Member Singapore Shipping Association and empaneled with IMO as a specialist consultant. Views personal.)

Comments

bottom of page