China has pledged to ease export restrictions on rare-earth minerals, fertilizers, and tunnel-boring machines during a recent diplomatic visit to India. However, India’s substantial trade deficit with China remains a pressing issue. Despite the Rs 18,100 crore PLI scheme and recent discoveries of rare earth reserves, concerns remain over India’s heavy import dependence. Think tank Global Trade Research Initiative (GTRI) flagged India’s $100 billion trade gap with China in FY25, stressing that Chinese dominance in key imports is growing. China accounts for 57.2% of telecom and electronics imports, 44% of machinery, and 28.3% of chemicals and pharma. In antibiotics like erythromycin, 97.7% come from China, as do 96.8% of silicon wafers and 86% of flat panel displays.
India’s exports to China now represent only 11.2% of bilateral trade, down from 42.3% two decades ago. In response, India is boosting rare earth production, with IREL leading efforts and Madhya Pradesh reporting major REE reserves. Additionally, the PLI scheme aims to create 50 GWh of battery cell capacity over five years, attracting major players like Ola, Hyundai, Reliance, and Rajesh Exports. GTRI urges investment in deep-tech and reverse engineering to halve the trade deficit in five years.
