India’s trade relationship with China is showing a shift beneath the headline trade-deficit numbers. Indian exports to China have risen sharply in recent months, with electronics and engineering goods emerging as important contributors. The change offers a closer look at India’s growing role in global manufacturing, while also highlighting the substantial gaps that remain in the broader bilateral trade relationship.
Indian exports to China rose by nearly 40% during the April-August period of 2026, according to an analysis of government data reported by Bloomberg. Electronics and engineering products were among the key drivers of the increase.
Electronics Move Into Focus
Electronics has been one of the clearest areas of growth. India’s electronics exports to China tripled to around US$3.18 billion in FY2025-26, with products including printed circuit board assemblies, smartphones, display modules and telecommunications equipment contributing to the increase. Electronics shipments continued to grow in the current financial year, rising by more than 15% during April-August compared with the same period a year earlier.
The growth is significant because these products sit within supply chains that are increasingly important to the global technology industry. Industry representatives have linked part of the recent demand to the expansion of artificial intelligence infrastructure and data centres, which is increasing demand for electronic equipment and components.
Printed circuit board assemblies are one example. Indian PCBA exports to China rose more than 40-fold to around $1.5 billion in FY2025-26, according to Commerce Department data cited by Business Standard. At the same time, India continued to import a much larger value of electronics products from China, showing that the increase in exports does not yet represent a reversal of the broader supply-chain relationship.
Engineering Exports Also Increase
The change is not limited to electronics. Indian engineering exports to China have also recorded strong growth.
In June 2026, India’s engineering exports to China increased by about 74% year-on-year to $361.47 million, according to Reuters citing engineering exporters. The wider engineering sector grew by 21% during the month. Products involved include machinery, auto components and other industrial goods.
This suggests that Indian manufacturers are finding opportunities beyond traditional export categories. However, the relatively small base of exports to China means that high percentage growth should be interpreted alongside the absolute value of shipments.
The Trade Deficit Remains Large
The increase in exports should not be confused with a reversal of India’s trade relationship with China.
Government data shows that India exported $19.47 billion worth of goods to China in FY2025-26, while imports from China reached $131.63 billion. The resulting trade deficit was about $112.16 billion.
China therefore remains a major source of goods for Indian businesses and consumers, particularly in areas such as electronics, industrial inputs and components.
This distinction is important. India’s recent export growth demonstrates that Indian companies can increasingly participate in Chinese and wider global supply chains, but it does not show that India has replaced China as a manufacturing centre.
What the Export Growth Really Shows
The more important story may be the type of products India is beginning to export.
The movement of electronics assemblies, smartphones, display-related products, telecommunications equipment and engineering goods to China indicates that Indian manufacturing is becoming more integrated into complex international supply chains.
At the same time, much of the value chain remains outside India. Indian manufacturers still depend significantly on imported components, machinery and other industrial inputs. Building a deeper domestic supplier network will therefore be important if export growth is to translate into greater domestic value addition.
India’s next challenge is not simply to assemble more products, but to increase its capabilities across the manufacturing chain including components, semiconductor-related production, industrial machinery, product design, research and development and technology.
Recent developments in India’s semiconductor ecosystem illustrate this broader direction. For example, Dutch chipmaker Nexperia and Tata Electronics announced a partnership in September 2026 covering chip production and packaging in India. Such investments could gradually strengthen India’s position in higher-value segments of electronics manufacturing.
From Assembly to Value Addition
The expansion of exports to China provides evidence of progress, but it also highlights the distance still to be covered.
For India, the long-term objective would be to move beyond being a location for assembly and develop deeper domestic capabilities in components, design, intellectual property, technology and supply-chain management.
That process could become increasingly important as global demand for AI infrastructure, data centres, telecommunications equipment and advanced electronics expands.
The latest trade numbers therefore tell a more nuanced story than either a manufacturing success narrative or a simple account of dependence on China. India is exporting more manufactured goods to China, particularly electronics and engineering products, while continuing to import a much larger value of goods from its neighbour.
The emerging picture is one of gradual change rather than a wholesale transformation. “Made in India” is gaining a larger place in certain global manufacturing supply chains, but the next stage will depend on how much technology, components, design and value addition can increasingly be developed within India.
