India is adopting a strategic approach in its trade relations with China, aiming to expand exports and strengthen domestic manufacturing, while gradually reducing its dependence on Chinese inputs. A senior government official told PTI that the focus is on maintaining a balance rather than completely breaking away from Beijing. The executive said that while India is increasing exports to China by strengthening domestic production and diversifying its supplier base, it is not possible to continue to depend on Chinese inputs. “Although India does not desperately need to break away from China, it is building its capacity in terms of flexible supply chains as well as increasing its export potential,” the official said.The official said that India imports raw materials, intermediate goods and capital equipment from China on a large scale. These include auto components, electronic parts and assemblies, mobile phone components, machinery and related parts, and active pharmaceutical ingredients, all of which deliver finished products, contributing to domestic manufacturing and exports. “Whatever China is supplying is the backbone of India’s production. Some consumer durables are also coming but are less in number,” the official said. Trade data reflects this dependence along with increasing export momentum. India’s exports to China to increase by nearly 37% to $19.47 billion in 2025-26 from $14.25 billion in 2024-25. In contrast, imports from China increased by 16% to $131.63 billion from $113.44 billion during the same period, widening the trade deficit from $99.2 billion to $112.6 billion. For perspective, exports in 1997-98 were only $0.71 billion and imports were $1.11 billion. Sectors such as printed circuit boards, electrical equipment, telephone systems, shrimp, aluminum ingots, black tiger shrimp, ships and some agricultural commodities have seen export growth in the last financial year. Nevertheless, the official indicated that India needs to further broaden its export basket to increase its share in China’s imports. Also, the growth in imports is driven by demand for electronics, electrical machinery, pharmaceutical ingredients, APIs, auto parts, telecommunication equipment, industrial machinery, computer hardware and peripherals, organic chemicals, batteries, plastic raw materials, residual chemicals and bulk drugs. “All these goods are ultimately going into our industrial process, as we are industrialising, imports will naturally increase,” the official said. To correct this imbalance, the government is increasing efforts to promote domestic manufacturing. The production-linked incentive (PLI) scheme remains an important part of this effort, helping businesses build value chains within the country, although industries still require imported capital goods and intermediate inputs. Additionally, the government is identifying products where dependence on China is high and cost competitive, and exploring sourcing options from markets such as Taiwan, South Korea, Japan and the European Union. An Inter-Ministerial Committee (IMC) has been set up to keep a close watch on trade flows and take corrective action, if needed. The panel includes representatives from the Department of Commerce, Department of Revenue, Department for Promotion of Industry and Internal Trade, Directorate General of Foreign Trade and Directorate General of Commercial Intelligence and Statistics.