Trade and economic relations between India and its largest trading partner, China, seem poised to enter a new phase where both sides acknowledge a desire for strategic alignment and mutual ambition. China on Friday said it stands ready to work with India to fully leverage the role of bilateral economic and trade cooperation as a “ballast”, while the Indian side also is looking at making the two-way trade more balanced.
In a social media post regarding the meeting between Commerce and Industry Minister Piyush Goyal and China’s Minister of Commerce Wang Wentao during the just-concluded 14th Ministerial Conference of the World Trade Organization (WTO), the spokesperson of the Chinese embassy here said bilateral trade cooperation could be used “for jointly exerting influence on the world”. On Thursday, referring to the meeting with his Chinese counterpart, Goyal had said discussions were held on ways to expand trade and move towards balancing it.
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In recent years, the two sides haven’t been as open and unreserved in expressing their intent to bolster and restructure bilateral trade in a mutually beneficial way. Trade experts say the move might signal a pivot in the economic engagement between the two giant neighbours, amid the US-driven tariff war that has muddied the global trade outlook.
New Delhi pulled out of the China-led Regional Comprehensive Economic Partnership (RCEP) negotiations in 2019; it also consistently opposed and refused to join the Belt and Road Initiative, a Beijing-anchored global infrastructure corridor and investment facilitation venture.
Other than trade, China is also seeking greater openness for enabling investments in India. India recently relaxed Press Note 3 of 2020, through which Chinese investments in India are governed. The relaxation primarily benefits investing entities where the stake of the Chinese entities is 10% or less; they would not be required to seek prior government nod for investments in India.
Navigating the Deficit
Goyal said: “We (Wentao and he) have discussed ways to expand trade, move towards more balanced trade and generate trust to help smooth bilateral trade between China and India and give greater opportunity for our exporters to export pharmaceuticals, engineering products, fish and farm products.”
In April-February 2026, China left the US far behind to become the biggest trading partner of India. During this period, trade with China stood at $137.0 billion as against $127.8 billion with the US.
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The entire growth in trade with China has been driven by imports, which touched $119.5 billion in the first 11 months of last fiscal, precipitating a mammoth trade deficit of $ 102.1 billion.
Industrial Dependency
“This trade gap with China is projected to widen to $ 111.4 billion for 2025-26,” Ajay Srivastava, founder of GTRI, said. “The imbalance reflects India’s reliance on Chinese components and industrial inputs including electronics parts, electric vehicle batteries and components, solar cells and modules, machinery, organic chemicals and pharma ingredients,” he added.
Another recent relaxation with regard to economic ties with China was about manufacturing of capital goods, electronic capital goods, electronic components, polysilicon and ingot-wafer where the government has assured that the applications will be processed and decided on, within 60 days. While trade flourishes, China’s investments in India lag, with FDI of $2.5 billion in the last 25 years.
TOPICSChinaeconomic growthThis article was first uploaded on April three, twenty twenty-six, at five minutes past eleven in the night.