China's exports to the US plummeted 34.5% year-on-year to $28.8 billion in May from $44 billion a year earlier, show data released by China's General Administration of Customs on 10 June. 

This, however, was offset by China's rising exports, including to members of the Association of Southeast Asian Nations (up 15% on-year to $58.4 billion in May), and the European Union (up 12% to $49.5 billion), the data showed. 

As per data released by India's commerce ministry on 16 June, India's imports from China rose 21.7% to $10.32 billion in May from $8.48 billion a year earlier, driven by higher inflows of electronic goods, machinery, chemicals, and project-related equipment. 

Meanwhile, India's imports from the US declined to $3.63 billion in May from $3.85 billion a year ago, while exports to the country grew 17.3% year-on-year to $8.8 billion, led by higher shipments of smartphones and electronics. 

While these data sets highlight India's strategic position in an evolving global supply chain as American buyers diversify sourcing away from China, the redirection of Chinese exports to non-US markets raises fresh concerns about potential dumping and unfair trade practices in alternative markets.

The trade war between the US and China escalated after US President Donald Trump announced reciprocal tariffs in April, with particularly steep levies on Chinese imports into the country, although tensions have eased recently.

India is negotiating with the US for a bilateral trade agreement, aiming to stitch a landmark deal before Trump's 9 July extended deadline for the reciprocal tariffs to take effect.

"The trade data clearly signals that global supply chains are adapting rapidly. But the shift also brings new vulnerabilities," said Ajay Srivastava, co-founder of the Global Trade Research Initiative (GTRI). "India must be vigilant against import surges from China and ensure that trade remedies are available if there is any sign of dumping."

Also read | India's goods trade deficit narrows to $21.88 billion in May

India's trade and the Chinese factor

India's overall merchandise imports fell 1.8% to $60.6 billion in May from $61.7 billion a year ago mainly due to lower shipments of oil, gold, and diamonds. Excluding these three categories, India's imports jumped 12%, rising from $36.8 billion to $41.2 billion.

This trend is also visible in tax collections. India's earnings from Integrated GST (IGST) on imports jumped 72.9% to ₹42,370 crore in May from ₹24,510 crore a year earlier. Since petroleum products are not taxed under GST, this sharp increase mainly reflects a rise in imports of other goods like electronics, machinery, and industrial products.

Electronics and machinery led India's import growth in May. Electronics imports rose 27.5% to $9.1 billion, while machinery and computer-related imports jumped 22% to $5 billion.

Much of this increase in imports came from China. Combined imports from China and Hong Kong surged 22.4% in May—from $9.8 billion in 2024 to $12 billion in 2025.

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Meanwhile, India's engineering goods exports declined 0.8% year-on-year to $9.89 billion in May from $9.97 billion a year earlier. Factoring in April as well, India's engineering exports during the first two months of this financial year grew 4.7% to $19.40 billion from $18.52 billion in April-May last year.

"The engineering exports sector continues to show resilience despite persistent global challenges," said Pankaj Chadha, chairman of the Engineering Export Promotion Council. "While it recorded a marginal dip in shipments during May 2025, the cumulative number stays positive."

Meanwhile, geopolitical tensions in West Asia—especially involving Israel, Iran, the Houthis and Hamas—pose fresh risks for India. "If the Strait of Hormuz faces disruption, it could significantly raise logistics and energy costs for Indian exporters," said Srivastava of GTRI.

Also read | Israel-Iran conflict: How will rising crude oil prices affect India?

How India's key sectors fared

Exports

Among India's key export sectors, marine products rose slightly to $582.19 million in May from $575.85 million a year earlier. Exports of organic and inorganic chemicals jumped to $2.68 billion from $2.31 billion driven, in part, by growing demand from the US and Europe.

Ready-made garment exports grew to $1.51 billion in May from $1.36 billion in the same month last year, while India's electronic goods exports saw a sharp rise to $4.57 billion from $2.96 billion, with the US, the UAE, and the Netherlands among the major destinations.

Pharmaceutical exports rose to $2.47 billion from $2.30 billion. Leather and leather products exports also improved, to $386.23 million from $361.34 million.

However, India's engineering goods exports declined slightly to $9.88 billion in May from $9.97 billion a year ago.

Imports

On imports, India registered notable increases in several categories.

Cotton (raw) imports more than doubled to $102.30 million in May from $43.88 million a year ago, largely sourced from the US, Brazil, and Egypt.

Imports of sulphur and unroasted iron pyrite rose sharply to $59.37 million from $5.21 million, with potential origins including the UAE and Oman.

Imports of artificial resins and plastic materials rose to $1.97 billion from $1.89 billion, while chemical materials and products surged more than threefold to $3.43 billion, possibly due to rising procurement from China.

Iron and steel imports increased to $1.91 billion from $1.70 billion, mainly from countries like China, Japan and South Korea.

Machinery imports, both electrical and non-electrical, rose to $5.01 billion from $4.15 billion, and project goods imports climbed significantly to $144.60 million from just $31.62 million in May 2024.

Project goods, which refer to capital goods, machinery, equipment, and instruments used in infrastructure, industrial, and large-scale development projects, were mainly imported from China, the US, Germany.

Imports of electronic goods jumped to $9.09 billion from $7.15 billion, with a large share coming from China, Vietnam, and South Korea.