New Delhi: India’s dependence on China for key components used by its electronics manufacturing sector has grown significantly in recent years. Imports of goods under HS Chapter 85 from China accounted for $43.1 billion of India’s trade deficit with the country in FY26, up from around $20 billion in FY19. This points to a structural trade deficit rather than one driven by cyclical changes in imports, a report by Koan Advisory and the Institute of Chinese Studies, published last week, said.
The Harmonized System (HS) is an internationally standardised system for classifying traded goods. HS Chapter 85 covers electrical machinery and electronic equipment.
The report found that in FY19, China supplied 80 percent or more of India’s imports in around 461 six-digit tariff lines. In other words, for these product categories, at least four-fifths of India’s imports came from China. India imported goods under 3,843 six-digit tariff lines from China that year.
By FY26, the number of tariff lines in which China accounted for at least 80 percent of India’s imports had risen to around 636. India imported goods under 4,068 tariff lines from China in the fiscal, indicating that its dependence on Chinese manufacturing had widened across a larger range of products.
Trade patterns also point to a rise in imports routed through other countries and territories, including Hong Kong, Singapore and Vietnam. This highlights the different routes through which goods that may originate primarily in China can reach India, the report said.
India’s merchandise exports have continued to grow year-on-year, with the latest data showing a 17.85 percent increase in export value during the first five months of the current fiscal compared with the same period last year. However, the country’s manufacturing sector remains increasingly intertwined with imports from China.
The latest data from the Ministry of Commerce and Industry also shows a widening trade deficit in goods under HS Chapter 85. At a more granular level, the chapter includes telephone and telegraph equipment, including videophones (8517); electronic integrated circuits (8542); electrical accumulators, including separators (8507); semiconductor devices (8541); and flat-panel display modules (8524).
These categories alone accounted for a trade deficit of roughly $28.8 billion between India and China in FY26, according to the report. For electronic integrated circuits (8542), for instance, the gap between India’s exports to China and imports from there was roughly $8.9 billion last fiscal.
In the current fiscal, Ministry of Commerce and Industry data till July shows a deficit of roughly $5.085 billion in electronic integrated circuits. Imports of these products from China rose 72.25 percent between April and July 2026 compared with the same period last year. In the first four months of the last fiscal, India’s imports of electronic integrated circuits from China stood at roughly $2.958 billion.
India’s total imports of electronic integrated circuits from China stood at $8.935 billion between April 2025 and March 2026. The pace of growth in imports this fiscal is therefore set to outpace the previous year’s level.
The concentration of Chinese imports in the Indian market has also increased, the report said.
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China remains largest source of key components
In FY26, China accounted for roughly 29.5 percent of India’s total imports of electronic integrated circuits (HS 8542), while Hong Kong accounted for around 17.6 percent. For semiconductors (HS 8541), China accounted for 48.9 percent of India’s imports in FY26, the report said.
Imports of telephone sets, smartphones, routers and other equipment under HS 8517 from China accounted for roughly 54.3 percent of India’s total imports in this category in FY26. Ireland accounted for around 14.9 percent, while Hong Kong and Vietnam accounted for 6.3 percent and 5.8 percent, respectively, according to the report.
India’s exports to China have also continued to grow year-on-year, although they remain much smaller than its imports. Merchandise exports to China stood at $9.61 billion in the first five months of the current fiscal, up from $6.93 billion in the corresponding period of FY26.
India’s top export product to China comes under HS 851779, covering telephone parts and transmission/reception apparatus. Ministry of Commerce and Industry data till July 2026 shows exports under this code grew by 275.99 percent. The report said much of the growth under this sub-head in FY26 came from printed circuit boards.
India’s exports under HS 851779 stood at $1.003 billion between April and July 2026, up from $266 million in the same period last year.
This is the second year in which exports under the sub-heading have grown. In FY26, India’s exports of goods under HS 851779 stood at $2.32 billion, up 498 percent from $389 million in FY25. Exports have grown further in the current fiscal.
India’s overall exports stood at $215.91 billion in the first five months of the current fiscal, up from $183.21 billion between April and August 2025. Merchandise imports rose around 18 percent during the period to $363 billion, from roughly $307.09 billion a year earlier.
Exports of electronic goods under HS Chapter 85 rose roughly 39.72 percent in the first five months of the current fiscal to $26.6 billion, from around $19 billion in April-August 2025, according to Ministry of Commerce and Industry data published on Tuesday.
Electronic goods have been a key driver of India’s overall export growth, particularly as smartphones are increasingly assembled in the country for export, especially to the US.
At the same time, India’s imports of electronic goods rose roughly 43.57 percent to $66.47 billion between April and August 2026, from around $46.3 billion in the same period last year.
India’s overall merchandise imports from China also rose 27 percent between April and August 2026. New Delhi imported roughly $65.49 billion worth of goods from China during the first five months of the current fiscal, compared with around $51.56 billion in the same period last year.
(Edited by Chingkheinganbi Mayengbam)
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