India’s Top Trade Partners

India’s trade relationships play a crucial role in shaping its economic growth and global standing. As one of the world’s largest emerging economies, India engages in extensive international trade across diverse sectors such as petroleum, machinery, pharmaceuticals, textiles, and information technology. Its trade network spans continents, connecting with both developed and developing economies. The composition of India’s top trade partners reflects its strategic economic and geopolitical priorities, including energy security, export diversification, and integration into global value chains.

Background and Context

India’s external trade expanded significantly following the economic liberalisation of 1991, which dismantled restrictive trade policies and encouraged global integration. Since then, India has moved from an inward-looking economy to a dynamic participant in international markets. Its trade policy emphasises balanced relationships with major economies, focusing on promoting exports while securing essential imports such as crude oil and technological goods.
India’s foreign trade is governed by frameworks such as the Foreign Trade Policy (FTP) and multiple Free Trade Agreements (FTAs) with regions like ASEAN, South Korea, and Japan. These arrangements aim to enhance competitiveness, attract investment, and reduce trade barriers. The balance of trade, however, often remains in deficit due to the country’s heavy dependence on imported energy and machinery.

Major Trade Partners (Recent Trends)

India’s top trade partners comprise a combination of Western economies, regional neighbours, and resource-rich nations. As of recent data, the leading partners include:

• United StatesThe United States remains India’s largest trading partner in goods and services combined. Bilateral trade exceeds USD 120 billion annually, driven by exports such as pharmaceuticals, gems and jewellery, machinery, and textiles, alongside imports of crude oil, aircraft, and electronic components. The relationship also extends to significant service sector cooperation, particularly in information technology and professional services.
• ChinaChina stands as India’s largest import source and one of its leading overall trade partners. India imports electrical machinery, chemicals, active pharmaceutical ingredients (APIs), and electronic goods, while exporting minerals, organic chemicals, and cotton. Despite geopolitical tensions, trade volumes have continued to grow, underscoring the deep interdependence between the two economies.
• United Arab Emirates (UAE)The UAE holds a vital position due to its proximity, large Indian diaspora, and role as a trading and re-export hub. Bilateral trade includes petroleum, gold, jewellery, and food products. The signing of the Comprehensive Economic Partnership Agreement (CEPA) in 2022 significantly boosted trade, aiming to reach USD 100 billion in non-oil trade within five years.
• Saudi ArabiaAs one of India’s principal energy suppliers, Saudi Arabia contributes heavily to India’s crude oil imports. Bilateral trade exceeds USD 50 billion, primarily dominated by energy, fertilisers, and petrochemical products. India exports rice, machinery, and chemicals in return.
• European Union (EU)Collectively, the European Union remains a major trade bloc for India, with countries such as Germany, the Netherlands, and Belgium being significant partners. Key exports to the EU include textiles, machinery, automotive components, and pharmaceuticals, while imports consist of engineering goods, chemicals, and technology-intensive products.
• SingaporeSingapore serves as both a trading partner and an investment gateway to Southeast Asia. Trade includes petroleum products, machinery, electronics, and gems. The India–Singapore Comprehensive Economic Cooperation Agreement (CECA) facilitates investment and trade in goods and services.
• BangladeshBangladesh has emerged as a leading South Asian trade partner, with India exporting cotton, vehicles, machinery, and chemicals. In turn, India imports garments and food items. This relationship underscores India’s growing regional economic influence and cross-border connectivity initiatives.
• RussiaHistorically a key strategic ally, Russia remains important for India’s imports of crude oil, fertilisers, and defence equipment. Bilateral trade has expanded recently, particularly due to discounted Russian oil purchases following global sanctions, significantly altering trade dynamics.
• AustraliaAustralia’s trade with India revolves around coal, education services, and agricultural goods. The India–Australia Economic Cooperation and Trade Agreement (ECTA), signed in 2022, seeks to enhance trade liberalisation and strengthen the Indo-Pacific partnership.
• Indonesia and MalaysiaBoth countries are vital sources of palm oil, coal, and hydrocarbons, while India exports refined petroleum and manufactured goods. These relationships underpin India’s resource security and participation in regional trade networks.

Composition of Exports and Imports

India’s trade portfolio reflects a diverse economy balancing industrial exports and essential imports.
Key Export Commodities:

• Petroleum products
• Gems and jewellery
• Pharmaceuticals
• Engineering goods and machinery
• Organic chemicals
• Textiles and garments
• Information technology services

Key Import Commodities:

• Crude oil and petroleum products
• Gold and precious metals
• Electronic goods and semiconductors
• Machinery and transport equipment
• Chemicals and fertilisers
• Edible oils (notably palm oil)

Energy imports remain the largest contributor to India’s trade deficit, though strong service exports—especially in software and IT-enabled services—offset part of this imbalance.

Strategic and Economic Implications

India’s trade relationships reflect both economic pragmatism and geopolitical strategy. The country’s engagement with the United States and European Union signifies alignment with developed economies in technology and investment. Meanwhile, strong trade with China, Saudi Arabia, and Russia highlights economic necessity and diversification.
India’s trade with neighbouring countries under the South Asian Free Trade Area (SAFTA) and with ASEAN members supports its “Act East” policy, promoting regional integration. Additionally, trade agreements such as CEPA (UAE) and ECTA (Australia) signal India’s move towards strategic economic diplomacy in the Indo-Pacific region.

Challenges and Future Outlook

Despite robust trade growth, India faces several challenges:

• Trade Deficit: Persistent imbalance due to high oil and gold imports.
• Dependence on Specific Markets: Heavy reliance on a few key partners exposes the economy to external shocks.
• Logistical Bottlenecks: High transportation and infrastructure costs reduce export competitiveness.
• Non-Tariff Barriers: Standards and certification requirements in foreign markets often constrain exports.