Chinese Imports Into India’s Core Manufacturing Sectors Jump 38% In Two Years

A Lok Sabha reply puts hard numbers on a trend factory owners have felt for a while: engineering goods alone drove 92% of a $23.9 billion surge in imports from China across textiles, toys, plastics and engineering goods.

The scale of India’s manufacturing dependence on China just got spelled out in Parliament, and the numbers are worth sitting with. Between 2023-24 and 2025-26, imports from China across four core categories, textiles, toys, plastics and engineering goods, climbed 37.7% to reach US$87.34 billion, up from US$63.44 billion two years earlier. That is an extra US$23.90 billion of Chinese goods flowing into exactly the sectors where India says it wants to build.

The data comes from a written reply to Lok Sabha Unstarred Question No. 3694 on imports and dumping, and the single most striking takeaway is how lopsided the growth is. Engineering goods alone accounted for roughly 92% of the entire increase.

Where the money went

Broken down by category, the picture is clear about what is driving the trend.

Engineering goods are in a league of their own here, not just in size but in what the category actually contains.

The catch: it is mostly machinery, not finished goods

Before anyone reads this as a straight story of Chinese finished products swamping Indian factories, the composition matters. The engineering goods figure covers Customs Chapters 84 and 85, which means industrial machinery, mechanical and electrical equipment, electronics and components. That is a far broader bucket than finished light-engineering products sitting on a shelf.

This distinction is the whole ballgame for anyone in manufacturing. Machinery and intermediate inputs can actually strengthen domestic production. A tool room importing a high-precision machine, or an EV maker bringing in components it cannot yet source at home, is using Chinese imports to build Indian capacity, not compete against it. Finished imports are the opposite story, landing directly on top of Indian producers. The aggregate data, unfortunately, does not separate the two, so the same headline number contains both a strength and a vulnerability.

The bigger frame: a record trade deficit

The Lok Sabha reply sits inside a much larger trend. India imported a record US$131.63 billion of goods from China in FY 2025-26, close to 17% of all its merchandise imports, and the trade deficit with China hit a record US$112.16 billion for the year. That deficit has widened roughly 155% over five years, a stretch that overlaps almost entirely with the Make in India and Production Linked Incentive push meant to pull manufacturing home.

The uncomfortable reality is that the localisation drive and the import surge are happening at the same time. Part of the reason is structural: much of what India buys from China is the raw material, intermediate goods, capital equipment and advanced technology that feed clean energy, EVs, electronics, semiconductors, pharma, fertilisers and infrastructure. In several of these, domestic alternatives are either unavailable or more expensive, so the imports are effectively enabling the very industries the country is trying to grow. The problem is concentration. Leaning this heavily on one source builds real exposure to supply disruptions, export curbs and geopolitical pressure, the kind China demonstrated when it restricted rare-earth magnet exports.

What the data does not tell us

The parliamentary reply is candid about its own limits, and this matters for how the story gets read. It provides value but not volume, so it cannot show whether India is buying more units or simply paying more for them. It also does not assess the impact on the MSME clusters that would feel finished-goods competition most acutely, places like Karur, Tiruppur, Coimbatore and Erode. Without volume, price, order-book, employment and capacity-utilisation data at the product level, the numbers cannot establish how much actual injury domestic manufacturers are taking. That is a real gap, and it is the difference between a talking point and a case for action.

The tools already on the table

The government pointed to three levers already in use, and notably did not announce any new product-specific duty or investigation alongside the reply.

That last point comes with an important caveat that often gets lost in the noise. Rising or cheap imports do not, on their own, amount to dumping. Dumping requires goods to be exported below their normal value and to cause material injury to domestic producers, and all of that, the pricing, the injury and the causal link, has to be proven through investigation. Higher import numbers are a reason to look, not a verdict.

Why it matters for the factory floor

Strip away the trade jargon and the takeaway for Indian manufacturers is straightforward. The dependence is real, it is growing, and it is heavily concentrated in machinery and electrical equipment. Some of that dependence is helping Indian factories get built and get competitive. Some of it is squeezing the producers who compete with finished Chinese goods. The policy challenge, and the more honest way to frame this than a blanket call to cut imports, is telling those two apart: protecting the sourcing that genuinely enables domestic production, while building capacity or alternative supply in the areas where dependence has become a strategic weakness. For an industry living the China plus one conversation every day, this reply is a useful, if incomplete, map of exactly where that work needs to happen.

Source: Lok Sabha Unstarred Question No. 3694, “Imports and Dumping”; Ministry of Commerce and Industry trade data.