India’s diverse $87-billion US export basket complicates China transshipment claim
India’s $87.31 billion of exports to the United States in FY26 are coming under scrutiny after the White House accused China of routing goods through more than 40 countries to evade tariffs.
India has been placed in the highest-risk tier in the report, raising the prospect of greater scrutiny of Indian shipments and exporters.
But India’s trade data points to a more complicated picture. While the country imported $131.62 billion from China in FY26, its exports to the US span a wide range of pharmaceuticals, electrical equipment, machinery, engineering goods, vehicles, textiles and medical instruments.
That makes a key question harder to answer from aggregate trade data alone: are Indian exports to the US genuinely manufactured in India using Chinese inputs, or are Chinese goods being rerouted through India to avoid US tariffs?
The Global Trade Research Initiative (GTRI) has questioned the evidentiary basis of the US allegations.
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It points out that the White House cites a US Commerce estimate of $67 billion of goods allegedly transshipped through India, Mexico and Vietnam in 2025, but does not disclose India’s share of that amount, identify an Indian exporter or cite a specific fraudulent shipment.
That distinction matters because a rise in exports from a third country after US tariffs on China does not, by itself, prove that Chinese goods were relabelled and shipped through that country.
India’s US export basket is broad
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India’s exports to the US remained broadly stable in FY26, compared with $86.51 billion in FY25, according to Commerce Ministry TradeStat data.
Electrical machinery and equipment was the largest category at $25.68 billion, up 61.5 percent from $15.90 billion a year earlier.
Pharmaceutical exports stood at $8.67 billion, while articles of iron and steel were worth $3.02 billion.
India also exported $2.47 billion of vehicles and parts, $1.27 billion of optical, medical and precision instruments, $1.10 billion of aluminium products, $1.06 billion of furniture and $2.36 billion of knitted apparel.
The breadth of this export basket does not prove that Indian exports contain no Chinese inputs. But it does make it difficult to characterise the entire $87.31 billion export relationship as simple Chinese-goods rerouting.
The figures show that electrical machinery category, in particular, is broad and includes both finished products and components. The trade data therefore cannot establish how much value was added in India.
China is a major source of Indian inputs
At the same time, India’s trade data clearly shows the depth of its dependence on China.
India imported $131.62 billion from China in FY26, up from $113.45 billion in FY25.
Electrical machinery accounted for $46.37 billion, while machinery and mechanical appliances stood at $29.45 billion. Imports also included $11.52 billion of organic chemicals and $6.71 billion of plastics.
These figures demonstrate that Chinese machinery, components and industrial inputs are deeply embedded in Indian supply chains.
To be sure, an Indian manufacturer can import Chinese components, undertake substantial manufacturing or processing in India and export the resulting product to the US. Whether that product qualifies as Indian-origin depends on the applicable US rules of origin and the nature of the transformation carried out.
Pumps and compressors offer a test case
The White House report specifically highlights India’s Pune-Gujarat-Chennai corridor and pumps and compressors under HS 8413–8414 as an area of potential transshipment risk.
India’s own trade data shows substantial activity in these products.
In FY26, India exported $1.61 billion of liquid pumps globally, including $414.5 million to the US, while importing $326.4 million from China.
India also exported $1.48 billion of air pumps and gas compressors globally, including $335.4 million to the US, while imports from China stood at $1.63 billion.
“India’s large global exports weaken any presumption that its US shipments are simply Chinese goods being rerouted,” GTRI’s Ajay Srivastava said.
What the White House report says, and what the data shows
The White House’s August 13 report, The Great Transshipment Scam: Rise, Scope, and Costs, argues that Chinese exporters have increasingly used third countries to circumvent US tariffs through practices including relabelling, repackaging, re-invoicing and limited processing before goods enter the US market. It identifies more than 40 countries as having elevated transshipment risk and estimates annual tariff losses of $19 billion to $26 billion.
The report’s central argument is that US tariffs reduced direct imports from China while encouraging Chinese manufacturers to shift parts of their production and distribution networks to third countries.
The White House estimates that about $67 billion in US-bound goods were transshipped from China through Mexico, India and Vietnam in 2025, producing an estimated $28 billion in lost tariff revenue.
GTRI’s broader argument is that this does not automatically establish widespread tariff evasion by India.
US imports from China fell from $525.8 billion in 2017 to $327.5 billion in 2025, while total US imports increased from $2.41 trillion to $3.50 trillion, according to the GTRI analysis.
The shift shows that tariffs changed the geography of US sourcing, but it does not establish how much of the increase in imports from other countries represents genuine supply-chain diversification versus tariff evasion.
GTRI has argued that India should seek shipment-level evidence behind the US allegations and investigate the specific products identified by Washington, while distinguishing legitimate manufacturing using Chinese inputs from actual tariff evasion.
“Trade data correlations do not prove transshipment,” GTRI founder Srivastava has argued, while urging India to examine the specified products and protect legitimate exporters from unsupported action.
Source: www.moneycontrol.com