Aerial view of cargo ship and cargo container in harbor.<\/p>\n
Adoff 01 \/ 500px | 500px | Getty Images<\/p>\n
India’s exports to China soared in December while shipments to the U.S. declined as President Donald Trump’s steep tariffs prompt New Delhi to focus on alternative markets. <\/p>\n
Exports to China surged 67% in December to $2 billion, in contrast to goods shipped to the U.S. \u2014 New Delhi’s biggest export market \u2014 that dropped 1.8% to $6.8 billion, according to government data released late Thursday.<\/p>\n
The U.S. has slapped 50% tariffs on New Delhi, among the highest on any country and even more than on China, upending both the trade and diplomatic relations between the two countries.<\/p>\n
During the first nine months of the fiscal year ending March 2026, India’s exports to mainland China have risen nearly 37%, while shipments to Hong Kong have jumped more than 25%. <\/p>\n
Earlier this week, India’s Foreign Secretary Vikram Misri met Vice Minister of the International Department of the Communist Party of China Sun Haiyan in New Delhi to discuss<\/a> the “progress made in stabilizing and rebuilding bilateral ties with priority on business and people-centric engagements.”<\/p>\n Relations between the two countries have been thawing<\/a> since Prime Minister Narendra Modi and Chinese President Xi Jinping met at the Shanghai Cooperation Organization summit\u00a0in September sharing a vision of being partners not rivals.<\/p>\n China has emerged as India’s largest goods trading<\/a> partner, doing business worth $110.20 billion between April and December 2025, upstaging the U.S. at $105.31 billion, data from the India’s commerce ministry shows. <\/p>\n But India’s widening<\/a> trade deficit with Beijing and border disputes<\/a> have been a bone of contention between the two. The country’s trade balance with China is in sharp contrast with the U.S.<\/p>\n New Delhi runs a trade surplus with Washington, while it’s trade deficit with Beijing has been soaring. During April to December, India’s trade surplus with the U.S. was more than $26 billion, deficit with China stood at $81.7 billion.<\/p>\n In fiscal year 2025, India traded<\/a> goods worth $131.84 billion with Washington and $127.71 billion with its Asian neighbor, not accounting for Hong Kong.<\/p>\n Deficit, tariffs and diversification<\/p>\n India’s merchandise trade deficit for December rose<\/a> 21.4% year on year to $25 billion. The country’s merchandise exports in December rose 1.9% while imports grew 8.8% compared to a year ago. <\/p>\n However, the deficit was lower than a Reuters poll estimate of $27 billion. <\/p>\n Exports had registered a surprise growth of 19.4% in November, with shipments to the U.S. rising 22.6% amid hopes a possible deal. <\/p>\n India’s trade secretary Rajesh Agrawal on Thursday said that New Delhi was “very near” to finalizing<\/a> a deal with Washington but refused to put a deadline to it, according to domestic media reports.<\/p>\n Despite the two sides being engaged in negotiations for months, a deal has been elusive. U.S. Commerce Secretary Howard Lutnick on a podcast<\/a> last week said the India\u2013U.S. trade deal fell through because Prime Minister Modi did not call President Trump. <\/p>\n “I set the deal up. But Modi had to call President Trump. They were uncomfortable with it, so Modi didn’t call,” Lutnick said.<\/p>\n The Indian side has called these comments “inaccurate.”<\/p>\n U.S. Ambassador to India, Sergio Gor, who took charge last week, has said that finalizing a trade deal with a large nation like India is “not an easy task to get this across the finish line, but we are determined to get there.”<\/p>\n India, which has ambitions to become an export powerhouse, has been looking to diversify its exports to make up for the impact of U.S. tariffs.<\/p>\n