Modi-Xi Talks May Boost Trade
Key Highlights
- Xi Jinping is visiting India for the BRICS Summit after seven years.
- India-China bilateral trade reached USD 127.7 billion in 2025-26.
- India’s trade deficit with China widened to USD 99.19 billion.
- Indian exports to China rose 36.62% to USD 19.47 billion.
- China supplied major industrial inputs including electronics, machinery and chemicals.
- Modi-Xi talks could provide an opportunity to discuss trade and economic concerns.
India-China trade is expected to be an important area of discussion as Chinese President Xi Jinping visits New Delhi for the 18th BRICS Summit and is scheduled to meet Prime Minister Narendra Modi.
China was India’s second-largest trading partner in 2025-26, with bilateral trade rising 7.9% to USD 127.7 billion from USD 118.39 billion in the previous fiscal.
However, the trade relationship remains heavily tilted in China’s favour. India’s trade deficit with China widened to USD 99.19 billion in 2025-26 from USD 85 billion in 2024-25.
India’s exports to China increased 36.62% to USD 19.47 billion, while imports rose 16% to USD 131.62 billion. China’s share in India’s merchandise imports increased to around 17% from 15.7% a year earlier.
India remains significantly dependent on Chinese industrial inputs. Electronics, machinery, computers and organic chemicals together accounted for about USD 82.6 billion, or nearly two-thirds, of India’s imports from China. Chinese supplies are particularly important for electronics components, EV batteries, solar modules, APIs and specialty chemicals.
The trade imbalance is also linked to India’s imports of raw materials, intermediate goods and capital goods, including auto components, electronic parts, machinery and pharmaceutical inputs that support domestic manufacturing.
Chinese investment in India remains another sensitive area. India received USD 2.51 billion in Chinese FDI between April 2000 and March 2026, while investment rules continue to face restrictions for countries sharing a land border with India.
With economic ties improving alongside a cautious thaw in bilateral relations, the Modi-Xi engagement could provide an opportunity to address market access, supply-chain dependence and the widening trade deficit. (Reuters)
