India’s Electronics Push Is Growing, But So Is Its Dependence On Chinese Components

India’s electronics manufacturing boom is reshaping the country’s industrial landscape, but it is also deepening its dependence on China for the components that keep those supply chains running.

As India and China seek new avenues for a closer economic relationship on the eve of the BRICS Summit, a new study on trade flows has found that rising electronics imports from China reflect a deepening integration of supply chains rather than merely a dependence on price-competitive finished goods.

A report by Koan Advisory Group in partnership with the Institute of Chinese Studies (ICS) found that China accounted for at least 80% of India’s imports across 71 tariff lines at the eight-digit level in 2025-26.

Of these, 46 crossed the 80% threshold only after 2018-19, pointing to a significant rise in import concentration over time.

The number of such product lines has increased from 44 in 2018-19 to 71 in 2025-26, an increase of more than 60%.

The findings come against the backdrop of India’s $112.1 billion trade deficit with China in 2025-26, the country’s largest bilateral trade deficit.

Electronics Components Are At The Core Of The Dependence

The report examines bilateral trade at a granular product-line level, beginning with electrical and electronic equipment under Harmonized System (HS) Chapter 85.

The Harmonized System is the internationally standardised code used to classify traded goods, while HS Chapter 85 covers electrical machinery and electronic equipment.

Of the 71 tariff lines where China supplied at least 80% of imports, 46 crossed that threshold only after 2018-19, indicating that India’s import concentration has increased over time.

“The large number of tariff lines in the 90–99 per cent band highlights how deeply embedded Chinese sourcing has become in India's electronics imports,” the report noted.

The reliance is centred on a narrow set of core components, including motors, electrical machinery, cables and switching equipment. These are inputs used across telecom infrastructure, consumer electronics and industrial machinery.

This means the China dependence is not simply about Indian consumers buying finished Chinese products. A significant part of it sits deeper within the manufacturing chain, where components imported from China feed India’s own production.

China Accounts For Nearly Half Of Semiconductor Imports

The scale of this dependence is particularly visible in some strategically important products.

China remained the dominant source of India’s semiconductor imports under HS 8541 in 2025-26, accounting for 48.9% of total imports.

It was followed by Singapore at 8.4%, Indonesia at 7.5% and Vietnam at 6.6%.

China’s share, however, has fallen from around 64% in 2024-25, suggesting some diversification even as the country remains by far the largest source.

Lithium-Ion Batteries Emerge As A New Pressure Point

Lithium-ion batteries are another area where India’s expanding domestic manufacturing ambitions are coinciding with greater dependence on China.

India’s imports of lithium-ion batteries from China have more than doubled since 2021-22, reaching $3.9 billion in 2025-26.

China accounted for 83.6% of India’s total lithium-ion battery imports during the year, crossing the 80% dependence threshold for the first time.

“The sharp increase highlights lithium-ion batteries as an emerging area of strategic dependence for India's electronics and electric mobility ecosystem,” the report said.

The battery example also illustrates the opportunity that this integration presents.

As India seeks to build manufacturing capabilities in sectors such as electric mobility and energy storage, access to established global supply chains can support the expansion of domestic production.

The policy challenge is to use existing integration to deepen domestic capabilities and increase the share of value created in India, the report said.

India’s China Trade Deficit Is Structural

The growing concentration in electronics components is also reflected in the broader trade relationship.

India’s overall trade deficit with China reached $112.1 billion in 2025-26, of which electrical machinery alone accounted for $43.1 billion — roughly 38% of the total.

HS Chapter 85 was India’s largest export chapter to China, with exports of $3.18 billion. However, that figure was dwarfed by imports in the same category.

The report characterises this imbalance as long-term in nature.

“India's trade deficit with China is structural rather than cyclical, remaining concentrated in the same major HS chapters over time and continuing to widen,” it added.

Why Restricting Imports May Not Solve The Problem

The findings suggest that simply restricting Chinese imports may not address the underlying problem.

The dependence is concentrated in upstream components rather than only finished products. Those components feed Indian assembly lines and manufacturing operations, making them difficult to replace quickly without building domestic capabilities.

“As long as the components feeding Indian assembly lines continue to originate almost entirely from China, the trade deficit in this chapter will remain structurally anchored, regardless of growth in domestic electronics output,” the report said.

Instead, the report calls for policy to prioritise the localisation of upstream component manufacturing, supported by India’s critical-minerals strategy.

Where domestic alternatives remain unviable, it recommends a calibrated framework for selectively permitting Chinese manufacturers to produce inside India.

The ultimate objective, the report concluded, is a calibrated shift from persistent reliance on imports towards locally embedded manufacturing capacity.

India’s Manufacturing Ambitions Meet Supply-Chain Reality

Samira Sarah Abraham, Economics Lead, Koan Advisory Group, and one of the authors of the report, said the depth of integration across these product categories is a reality of the two economies.

“India's manufacturing ambitions will be better served by finding ways to work with this integration rather than simply seeking to reverse it,” Abraham said.

Santosh Pai, Member of the Governing Council, ICS, said the integration in electronics is not only deep but is expanding across a wider set of products over time.

Crucially, he said, it is concentrated in upstream and component-level manufacturing, where domestic capabilities remain uneven.

“Our findings point clearly to the fact that policy should focus not on broad-based shifts in trade exposure, but targeted localisation and accelerated value addition in specific high-impact segments,” Pai said.

The numbers therefore point to a paradox at the core of India’s electronics boom: the country is producing more electronics domestically, but that expansion is also increasing its need for Chinese inputs.