Introduction:
Relations between India and China seem to be improving following the trip of Chinese Foreign Minister Wang Yi to New Delhi, where he jointly co-chaired the 24th round of the Special Representatives’ meeting with India’s National Security Advisor Ajit Doval. The visit resulted in a series of steps aimed at easing tensions and restoring trust after more than five years of strained relations. Among the most notable actions were the decision to reopen border trade routes and boost cross-border investment flows, creating fresh opportunities for businesses on both sides.
Discussions are additionally progressing to resume border commerce in locally produced goods, signaling a positive development in bilateral ties. Both sides have suggested reopening designated trade points along their shared border. This could give access to cost-effective goods, enable businesses to leverage shared manufacturing capabilities, and broaden market opportunities for producers on both sides.
India’s participation in the Shanghai Cooperation Summit
The Shanghai Cooperation Council is a two-day gathering that brought together more than 20 leaders from non-Western countries, serving as a platform to highlight China’s goal of shaping a new global security and economic framework.
Prime Minister Narendra Modi attended the recently finished Shanghai Cooperation Organisation (SCO) meeting in China, marking his first trip to the country in seven years. On the sidelines of the summit, he engaged in a bilateral discussion with President Xi Jinping, offering a valuable opportunity to further dialogue and cooperation between the two countries.
At the summit, Prime Minister Modi stressed regional stability, security, and sustainable development, framing India’s SCO plan around Security, Connectivity, and Opportunity. He underlined that peace and conversation are vital for prosperity and for building more constructive India-China ties.
On August 31, Modi and President Xi emphasized that India and China should collaborate on development rather than competing. Improved relations could enhance trade, attract investment, and increase confidence, benefiting India’s infrastructure, technology, and manufacturing sectors while giving China greater entry to India’s fast-growing consumer market.
The Tianjin Declaration of the SCO Council further emphasised commitments to bolster cooperation in artificial intelligence, reaffirming that all countries have equal rights to develop and utilise AI. Such collaboration could accelerate the development of more advanced and cost-effective AI models, facilitating broader adoption across key sectors like healthcare, logistics, finance, and manufacturing. This, in turn, may help lower operational costs, boost productivity, and create new investment opportunities, supporting sustainable growth among member states.
Supporting this vision, President Xi pledged that China will continue to share the opportunities of its vast market and implement its action plan for high-quality economic and trade cooperation within the SCO framework. For India, this offers an opportunity to expand bilateral economic ties by aligning on trade and development initiatives under the SCO umbrella. Enhanced cooperation in areas such as market access, supply chain integration, and cross-border investment could strengthen engagement, further consolidating the positive momentum in India–China relations.
Top outcome of the Special Representatives’ and SCO summit dialogue:
Both sides agreed to maintain engagement through diplomatic and military channels. Prime Minister Modi emphasised the importance of a fair, reasonable, and mutually acceptable resolution to the boundary issue, highlighting dialogue and peaceful negotiations.
Prime Minister Modi welcomed the progress made since his last meeting with President Xi in 2024, noting constructive steps in bilateral engagement.
India expressed its readiness to work constructively with China, signalling a willingness to expand cooperation.
India and China agreed to resume direct passenger flights and update the Air Services Agreement, simplifying visa procedures to promote trade, tourism, and broader cross-border interaction.
Discussions included plans to revive trade through key border passes such as Lipulekh, Shipki La, and Nathu La, potentially enhancing economic opportunities and improving local connectivity.
At the SCO Summit, both leaders reaffirmed that India and China should be seen as development partners rather than rivals, signaling a commitment to closer collaboration.
The Tianjin Declaration of the SCO Council reaffirmed commitments to strengthen cooperation in artificial intelligence, with significant potential to reduce costs, boost innovation, and generate new investment opportunities across member states.
President Xi pledged that China would share the opportunities of its vast market and pursue high-quality development of economic and trade cooperation within the SCO framework, creating fresh avenues for bilateral economic engagement with India.
The summit highlighted three key pillars of India’s engagement within the SCO framework -Security, Connectivity, and Opportunity, underscoring peace and regional stability as essential for sustainable prosperity.
Focus on the border and bilateral co-operation.
During his two-day visit to New Delhi, Chinese Foreign Minister Wang Yi highlighted that India and China should view each other as partners. This visit marked only the second high-level engagement between the two nations since 2020, emphasising its importance in ongoing efforts to rebuild and strengthen bilateral relations.
Wang Yi held talks with India’s External Affairs Minister S. Jaishankar on August 18, 2025, and was scheduled to meet Prime Minister Modi on August 19. He remarked that India-China bilateral relations are progressing on a “positive trend” toward deeper cooperation.
The visit also yielded concrete outcomes, with Wang assuring that China would resume supplying critical commodities to India, including fertilisers, rare earth minerals, and tunnel boring machines (TBMs), which are vital for India’s agriculture and infrastructure development.
Global attention on India-China engagement
An improvement in India-China relations holds considerable global significance, given the economic and strategic weight of both countries. As Asia’s largest emerging economies and key players in multilateral platforms like BRICS, closer cooperation between India and China could bolster regional stability, open new opportunities for trade and investment, and enhance joint efforts to tackle global challenges such as climate change, supply chain resilience, and sustainable development.
India-China trade activities over the year
India-China trade has steadily increased over the years, though the trade balance has continued to favour China, with India heavily dependent on imports of essential goods such as electronics, machinery, and industrial inputs. In FY24, the total value of imports from China reached US$101.74 billion.
| India-China Trade Relation Year-on-Year (Values in USD Billion) | |||||
| Trade Activities | 2020-2021 | 2021-2022 | 2022-2023 | 2023-2024 | 2024-2025 |
| India’s Export to China | 21.19 | 21.56 | 15.31 | 16.66 | 14.25 |
| % Growth | 2% | -29% | 9% | -14% | |
| China’s Export to India | 65.21 | 94.57 | 98.51 | 101.74 | 113.46 |
| % Growth | 45% | 4% | 3% | 12% | |
| Total Trade Volume | 86.40 | 116.13 | 113.82 | 118.4 | 127.71 |
| % Growth | 34% | -2% | 4% | 8% | |
| India’s Trade Balance | -44.02 | -73.01 | -83.2 | -85.08 | -99.21 |
India’s exports to China have been declining since 2022, with outbound shipments dropping by nearly 14% in FY 2024–25. Meanwhile, imports from China have continued to grow, further widening the trade gap and highlighting the persistent imbalance in bilateral trade.
| India’s Leading Exports to China (Values in USD Billion) | |||
| Commodity | FY 2022-23 | FY 2023-24 | % Growth |
| Iron Ore | 1.39 | 3.64 | 162% |
| Marine Products | 1.44 | 1.37 | -5% |
| Petroleum Products | 1.91 | 1.17
|
-39% |
| Spices | 0.8 | 0.9 | 13% |
The reopening of border trade routes and initiatives to promote cross-border investment are expected to boost trade volumes between the two nations in the coming years. Improved connectivity could enable smoother movement of goods, especially locally manufactured products, and reduce costs for businesses on both sides. However, while these measures may increase India’s imports from China and open new avenues for economic collaboration, the existing trade deficit is unlikely to be closed in the near term.
India’s exports in FY 2024–25 demonstrated a varied performance across key products. Notably, iron ore shipments increased by 162%, indicating robust demand from China, making iron one of India’s top export items for the timeframe. In comparison, other significant export categories, including seafood and crude oil, faced declines, underscoring the uneven results across India’s export portfolio.
| India’s Major Imports from China (Values in USD Billion) | |||
| Commodity | FY 2022-23 | FY 2023-24 | % Growth |
| Electronic Components | 8.2 | 12.14 | 48% |
| Computer Hardware Peripherals | 7.25 | 8 | 10% |
| Telecom Instruments | 6.82 | 6.82
|
0% |
| Organic Chemicals | 6.44 | 4.43 | -31% |
India’s imports from China showed substantial growth across most major categories. In particular, electronic components recorded a notable increase of 48%, reflecting strong demand from India’s industrial and technology sectors. Other top imports from China, such as machinery, gadgets, and industrial materials, also grew in line with the overall rise in China’s shipments to India. The sole exception was organic chemicals, which saw a drop during the period. This pattern highlights China’s continuing role as a crucial supplier to India.
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Conclusion:
Over the past year, India-China relations have experienced a cautious yet meaningful thaw, highlighted by high-level engagements and renewed strategic dialogue. Chinese Foreign Minister Wang Yi’s visit to New Delhi, along with Prime Minister Modi’s participation in the SCO Summit, provided important platforms to rebuild trust, ease tensions, and advance bilateral cooperation.
Agreements to reopen border trade routes, resume direct flights, and promote cross-border investment reflect both nations’ commitment to strengthening economic ties and people-to-people connectivity. While India’s imports from China continue to grow and exports remain uneven, measures such as the resumption of border trade in locally manufactured goods present concrete opportunities to diversify trade, boost regional integration, and foster economic collaboration.
Beyond bilateral benefits, enhanced India-China engagement carries wider geopolitical and global implications. Stronger ties can support regional stability, improve cooperation in multilateral forums like the SCO and BRICS, and contribute to economic and strategic resilience across Asia. Despite ongoing challenges, these recent developments signal a more constructive, forward-looking phase in India-China relations, with potential advantages for trade, investment, and sustainable growth for both countries. For companies looking to explore these emerging opportunities, engaging a Company Registration consultant in India can facilitate smooth market entry and ensure compliance with regulatory requirements.
