In the present era, there are two big problems regarding India’s trade. The first problem is America’s tariffs. 50 percent tariff on Indian products is causing a lot of harm. Even though India’s exports to America have increased and India’s overall exports have also increased, but due to no agreement on tariffs and trade deals, the indifference of foreign investors from India can be clearly seen in the stock market. When will the trade deal between India and America be completed? Will the tariff be removed or not? This is a thing hidden in the womb of time. Nothing has been said on this yet. Will India have to bear this until both the countries agree on everything?
The second problem seems to be bigger than the American tariff. This is a problem from which India does not need to talk to anyone to get rid of it. For this, the government of the country will have to take steps itself. This problem is the increasing trade deficit with China. Which has currently crossed 100 billion dollars. Due to which India’s earnings are greatly affected. The truth is also that India is very dependent on Chinese goods, but India’s trade deficit with China is like a termite, which is continuously hollowing out India’s MSMEs and also harming the country’s economy.
To avoid this disease, the Indian government can make a big announcement. This announcement can be made in Budget 2026. This announcement may cause sleepless nights for China. According to the information, India can make many such announcements to reduce the dependence on imports, which can reduce India’s trade deficit. These announcements can cause a lot of trouble to those countries with which India has a huge trade deficit. These countries can be especially those with which India has more non-oil trade. Let us also tell you what the Indian government is going to do.
Big decision will be taken in the budget
To reduce trade deficit and reduce dependence on single source supply chains, India is considering increasing customs duties and providing targeted incentives on products whose imports remain high despite local production. This proposed initiative can be presented in the upcoming budget. An official associated with this matter said in a media report that there are some items for which we are highly dependent on some geographical areas. We want to reduce the risks associated with imports. The official further said that some items may be given financial assistance, while duty on others may be increased. The government has prepared a list of about 100 items, which include engineering goods, steel products and machinery as well as consumer goods like suitcases and flooring materials, which can be considered for incentives.
Why is the Indian government going to take this decision?
The import duty on many of these products currently ranges between 7.5 percent to 10 percent. This step has been taken in view of the continuous increase in the country’s trade deficit. India exported goods worth $292 billion in April-November of the financial year 2026, while imported goods worth $515.2 billion in the same period, which remains a cause of concern for policy makers regarding external weaknesses. The industry has also been encouraged to reduce dependence on a single source in its supply chain and develop local sources, a person familiar with the deliberations said. A representative of the steel industry said the problem was the low quality of some locally produced goods and the higher prices compared to imports.
China remains the biggest headache
China remains a major supplier in many categories. For example, India imported umbrellas worth $20.85 million in FY2025, of which $17.7 million were sourced from China. Imports of spectacles and goggles were worth about $114 million in 2024-25, of which almost half came from China and a significant portion was sent via Hong Kong, while Italy was the third largest supplier. China’s share in India’s imports of some agricultural machinery is also up to 90 percent. This imbalance is clearly visible in bilateral trade also. India’s goods exports to China in April-November of FY 2026 were $12.2 billion, while imports were $84.2 billion, resulting in a trade deficit of about $72 billion.
