India is the fastest-growing economy in the world and is ranked fifth in terms of Gross Domestic Product (GDP), which is projected to reach $4 billion by the end of the year. The International Monetary Fund predicts that India will surpass Germany by 2027 to become the third-largest world economy.
In recent years, India’s trade dynamics have shifted significantly, notably the changes in its top trading partners. Every major country in the world, from the United States to the UK, to Germany, Australia, and Canada, wants to trade with India, given it’s the most populous country.
Let’s take a look at India’s top trading partners:
China
The Asian giant surpassed the United States of America to become India’s largest trading partner. Despite border differences, bilateral trade between India and China touched $118.4 billion. This marked a 3.24 percent increase in imports and a 8.7 percent growth in exports. The neighboring country dominates in telecommunications, technology, and pharmaceuticals.
Moreover, India is dependent on China for essential components such as microchips and lithium-ion batteries for EVs. India-China trade relations are at an all-time high. However, Beijing poses a challenge for New Delhi given the distinct political and economic systems.
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USA
The USA had been India’s top trading partner for two fiscal years. It slipped to the second position in FY24, with bilateral trade totaling $118.3 billion. The decline hasn’t made much of a difference for the two countries as trade relations remain robust.
Indian exports to the United States dropped by 1.32 percent to $77.5 billion and imports from the United States dropped by 20 percent to $40.8 billion. However, the US remains a vital market for Indian goods – in sectors such as IT services, pharmaceuticals, textiles, and jewelry.
United Arab Emirates (UAE)
The UAE is India’s third-largest trading partner in FY24, with trade worth $83.6 billion. The UAE is a key market for Indian exports, including precious metals, machinery, and textiles, while it supplies crude oil, petroleum products, and precious stones to India.
The UAE’s strategic location as a trade hub also facilitates India’s access to other Middle Eastern and African markets.
Russia
Russia has seen a significant increase in its trade relationship with India, with total trade touching $65.7 billion. Exports from India grew by 78.3 percent, and imports surged by 952 percent, primarily due to the increase in imports of crude oil and fertilizers.
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This increase has widened the trade deficit with Russia, but it also represents a strategic diversification in India’s energy sourcing away from the Middle East. Despite US’s rebuke, India-Russia trade dynamics have not been affected.
Saudi Arabia
Saudi Arabia is another key trading partner, with bilateral trade totaling $43.4 billion. Trade with Saudi Arabia has recorded a more balanced growth trajectory, with exports from India more than doubling and imports rising at a slower pace.
Saudi Arabia remains a major supplier of crude oil to India, while it also imports Indian goods like rice, meat, chemicals, and textiles.
