Finance Minister Nirmala Sitharaman highlights how indirect exports and structural dependencies complicate India’s trade relationship with China, as New Delhi seeks to diversify and strengthen domestic capacities in strategic sectors.
Finance Minister Nirmala Sitharaman said India’s headline trade deficit with China does not fully capture what is being sold into the Chinese market, arguing that some shipments are routed through third countries because direct access remains limited. Speaking on the issue, she said Indian exporters can end up sending goods such as buffalo meat and generic medicines via places such as Vietnam, even when the end demand is in China, because market access barriers prevent direct sales. That, she said, makes it harder for official records to reflect the true destination of some exports.
Her remarks come against the backdrop of a wide and persistent imbalance in bilateral trade. Business Standard reported earlier this year that India’s exports to China rose in 2025, but the deficit still reached a record $116.12 billion as imports from China climbed faster than outbound shipments. Policy Circle has described the gap as structural, tied to India’s dependence on Chinese capital goods, intermediate products, electronics, telecom equipment, pharmaceutical inputs and green technology.
Sitharaman also pointed to pharmaceuticals as a long-running problem area. According to Moneycontrol, Indian drugmakers have struggled to gain a stronger foothold in China, with exports to that market falling in fiscal 2025-26 amid regulatory hurdles, non-tariff barriers and intense competition from domestic manufacturers. That fits with her argument that India has raised market-access concerns for years, including on buffalo meat and generic medicines, but has not seen the opening it wants.
At the same time, the finance minister said India is trying to reduce its dependence on Chinese supplies in sensitive areas by building domestic capacity, particularly in high-technology and strategic sectors. She said current imports are increasingly concentrated in critical components, including parts used in solar manufacturing, where local production is still limited. Her comments suggest New Delhi is not only trying to narrow the trade gap, but also to change the composition of what India buys, shifting away from concentration in a single source market.
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