China’s recent easing of export restrictions on fertilizers, rare earths, and tunnel-boring machines to India has been welcomed as a positive step. However, a new report from the Global Trade Research Initiative (GTRI) emphasizes that self-reliance remains India’s most effective safeguard against its widening trade deficit with China.
The report noted that India’s economic dependence on Chinese imports remains significant, with China supplying over 70 percent of India’s requirements in several key sectors. Everyday products such as laptops (80.5 percent) and flat panel displays (86 percent) continue to be heavily dominated by Chinese imports.
India’s trade deficit with China reached a record USD 100 billion in FY2025. Moreover, India’s share in bilateral trade has declined sharply to just 11.2 percent, compared to 42.3 percent two decades ago—underscoring the country’s growing reliance on Chinese inputs and the vulnerability of its supply chains.
To address this imbalance, GTRI has recommended several measures, including a reverse-engineering program through India’s IITs and CSIR labs to create open-access blueprints of imported goods. The report also proposed a “Localize-100” system to identify and prioritize the most critical imports for domestic production.
According to the study, while China’s policy adjustments are helpful, they do not resolve the structural trade imbalance. Strengthening domestic manufacturing, investing in innovation, and reducing import dependence are seen as the most sustainable ways forward.
“A stronger, more self-reliant India will be better positioned to engage on equal terms, while building resilient supply chains that can withstand external pressures,” the report concluded.
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