India-China trade imbalance concerns have returned to the centre of bilateral discussions as New Delhi urged Beijing to provide fair market access for Indian businesses and address a trade relationship that remains heavily tilted in China’s favour.
Indian External Affairs Minister S. Jaishankar raised the issue during talks with Chinese Foreign Minister Wang Yi in Manila on Wednesday, July 22. The meeting took place on the sidelines of a regional gathering in the Philippine capital.
Jaishankar said India and China needed to address important aspects of their relationship, including market access, the trade balance and the predictability of supply chains. He also called for the resumption of meetings under bilateral mechanisms and platforms based on the priorities of both countries.
The talks came as India and China continued efforts to repair relations following years of diplomatic and military tensions caused by the deadly border confrontation in 2020. Relations began improving more substantially after Indian Prime Minister Narendra Modi met Chinese President Xi Jinping in October 2024.
India-China trade imbalance exceeds $100 billion
The India-China trade imbalance has expanded despite attempts by New Delhi to increase domestic manufacturing and reduce excessive dependence on Chinese products.
India imported goods worth approximately $132 billion from China during the 2025-26 financial year, its highest import total from any country. Total trade between the two countries stood at $151.10 billion, leaving India with a bilateral trade deficit of more than $100 billion.
The figures underline the scale of the economic challenge facing New Delhi. China remains one of India’s most important trading partners, but the commercial relationship is dominated by Indian purchases of Chinese machinery, components, chemicals and industrial materials.
Official Indian data show that the India-China trade deficit had already reached $99.21 billion in the 2024-25 financial year. India exported goods worth $14.25 billion to China during that period while importing products valued at $113.46 billion.
India’s exports to China had declined from $21.19 billion in 2020-21 to $14.25 billion in 2024-25. Chinese exports to India, by comparison, increased from $65.21 billion to $113.46 billion during the same period.
The continued expansion of the India-China trade imbalance has strengthened calls from Indian officials and businesses for Beijing to remove regulatory barriers and provide Indian companies with greater access to the Chinese market.
India demands fair market access in China
Fair market access has become one of India’s principal demands in its economic engagement with China.
Indian exports to China remain concentrated in a relatively narrow group of products, including iron ore, light naphtha, paraxylene, shrimps and castor oil. Many of these exports are commodities or raw materials rather than high-value manufactured products.
Chinese exports to India include machinery, electronic products, computers, integrated circuits, telecommunications equipment, lithium-ion batteries and fertilisers. These goods support several rapidly expanding Indian industries, but their scale also increases India’s dependence on Chinese manufacturing and technology supply chains.
New Delhi has repeatedly sought better access for Indian pharmaceutical products, information technology services, agricultural goods and other exports. Indian officials argue that regulatory and commercial barriers have prevented competitive Indian companies from expanding their presence in China.
The Indian Embassy in Beijing has described the size and continued widening of the India-China trade deficit as the two central concerns in bilateral commerce. It has also confirmed that India continues to engage China over unresolved market access issues.
Improved market access would not immediately eliminate the India-China trade imbalance, but it could allow Indian exporters to sell a broader range of goods and services in the Chinese market.
The Reuters report did not provide a detailed public response from Wang Yi to Jaishankar’s demands concerning trade and market access.
Supply chain predictability remains a concern
Jaishankar also raised concerns about supply chain predictability during his meeting with Wang.
India relies on Chinese inputs and machinery across industries including electronics, pharmaceuticals, telecommunications, renewable energy, automobiles and power generation.
Official Indian records show that major imports from China include active pharmaceutical ingredients, automobile components, electronic parts, mobile phone components and industrial equipment.
Many of these products are intermediate goods used by Indian factories to manufacture finished products. Some of the resulting goods are consumed domestically, while others are exported to international markets.
This relationship means that India’s dependence on Chinese imports cannot be addressed simply by restricting trade. Sudden limitations on Chinese supplies could raise production costs, delay manufacturing and affect Indian exports.
New Delhi is therefore pursuing two objectives. It wants to reduce excessive dependence on individual foreign suppliers while maintaining access to critical inputs that domestic industries cannot yet produce at sufficient scale.
The Indian government has introduced production-linked incentive programmes, semiconductor manufacturing support and other industrial policies designed to strengthen domestic production. It has also encouraged Indian businesses to identify alternative suppliers and diversify their supply chains.
However, the India-China trade imbalance indicates that reducing import dependence will require sustained investment, technological development and greater domestic manufacturing capacity.
India-China trade relations continue to improve
India-China trade relations are improving alongside a gradual diplomatic rapprochement between the two Asian powers.
India and China have resumed direct flights, while New Delhi has simplified procedures for approving business visas for Chinese professionals. The measures are intended to restore commercial and public links that were disrupted during the deterioration in relations after 2020.
Reports cited by Reuters also indicated that India-China border trade would resume on August 1 following a six-year suspension. The reopening would represent another step towards restoring normal economic exchanges between communities in the border region.
Jaishankar welcomed the positive developments but maintained that peace along the disputed Himalayan frontier remained essential for normal relations.
He said both sides had worked since October 2024 to maintain peace and stability in the border areas, but warned that the issue would continue to require close attention.
India and China share a largely undemarcated Himalayan boundary. Their troops clashed in the Galwan Valley in June 2020, resulting in the deaths of 20 Indian soldiers and four Chinese soldiers.
The confrontation led India to introduce tighter restrictions on Chinese investment, applications and commercial activity. It also caused both countries to deploy large numbers of troops and equipment along the disputed frontier.
Chinese investment restrictions begin to ease
India has started easing some restrictions on Chinese investment as relations with Beijing improve.
New Delhi introduced greater scrutiny of Chinese investments in 2020, requiring investments from countries sharing a land border with India to receive government approval.
The policy was intended to prevent opportunistic acquisitions and address national security concerns. However, the approval process also delayed investments and business partnerships involving Chinese companies.
India eased restrictions on Chinese investment in some industries during 2026, marking a significant shift from the more restrictive approach adopted after the border clash.
The changes reflect the practical importance of Chinese investment and technology to Indian manufacturing. Indian companies in several sectors depend on Chinese machinery, components, technical expertise or joint ventures.
Greater Chinese investment in India could support manufacturing and employment, but New Delhi is likely to maintain additional scrutiny in sensitive sectors involving telecommunications, data, critical infrastructure and national security.
Economic engagement will therefore continue to be balanced against India’s strategic concerns about dependence on China.
India seeks a more balanced economic relationship
New Delhi’s demands do not indicate that India intends to reduce commercial engagement with China altogether.
China supplies capital goods, components and raw materials needed by Indian manufacturers. These imports have contributed to the expansion of sectors including electronics, pharmaceuticals, telecommunications and renewable energy.
The Indian government has argued that imports can support integration into global value chains when they are used to produce finished goods domestically. It has also pointed to the growth of Indian mobile phone production and exports as evidence that imported components can support domestic industrial development.
However, a persistent India-China trade imbalance creates economic and strategic risks. Heavy dependence on a single supplier can leave manufacturers vulnerable to export controls, diplomatic disputes, logistical interruptions and sudden price increases.
India is therefore seeking a relationship in which trade remains substantial but becomes more balanced, predictable and reciprocal.
That approach requires greater access for Indian goods and services in China, more reliable supplies of essential industrial products and continued progress in resolving political and military disputes.
Border peace remains central to economic progress
The future of India-China trade relations will continue to depend on conditions along their disputed border.
Jaishankar described peace and tranquillity in the border areas as a prerequisite for normal relations. His remarks reflected India’s longstanding position that commercial engagement cannot be separated from security conditions along the frontier.
The October 2024 meeting between Modi and Xi created momentum for renewed diplomatic engagement. Since then, the two governments have taken steps to restore flights, facilitate visas, reopen trade routes and increase official communication.
The latest meeting between Jaishankar and Wang suggests that economic disputes will form an increasingly important part of the next phase of the relationship.
While military tensions dominated bilateral discussions after 2020, India is now placing renewed emphasis on fair market access, supply chain stability and the India-China trade imbalance.
Progress will depend on whether Beijing responds to India’s concerns by opening additional sectors to Indian exporters and whether both governments can maintain stability along the border.
For New Delhi, improving political relations without addressing the widening trade deficit would leave one of the most important structural problems in the relationship unresolved.
Published in SouthAsianDesk, July 23, 2026
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