Warming Ties: India-China Signal Trade and Diplomatic Reset

August 14, 2025 Posted by India Briefing Written by Archana Rao Reading Time: 5 minutes

India-China are taking steps toward renewed economic and diplomatic engagement after years of strained relations. Discussions are underway to reopen border trade in locally manufactured goods, and both countries are preparing to resume direct passenger flights suspended since 2020.

These developments coincide with Prime Minister Narendra Modi’s planned visit to Tianjin on August 28, 2025, for the Shanghai Cooperation Organization (SCO) Summit.

According to a Bloomberg report dated August 14, 2025, India and China are in discussions to resume border trade in locally manufactured goods, indicating a constructive development in bilateral relations after a prolonged period of strain. Both sides have put forward proposals to reopen designated trading points along their shared border.

On August 8, 2025, Director-General of the Department of Asian Affairs at China’s Foreign Ministry, Liu Jinsong, met with India’s Ambassador to China, Pradeep Kumar, to discuss India-China relations. As reported, China’s Ministry of Foreign Affairs has conveyed its readiness to enhance communication and coordination with India on the issue, noting that border trade has traditionally played a significant role in supporting the livelihoods of communities in the frontier regions of both nations.

Global attention on India–China engagement in 2025

This warming of India–China relations comes as New Delhi faces challenges in its trade ties with the US. In August 2025, Washington raised tariffs on Indian exports to 25 percent—significantly higher than those applied to other regional economies—complicating India’s external trade dynamics. The US has also threatened to impose an additional 25 percent tariff on India by August 21, 2025.

Anticipated resumption of direct passenger flights

According to reports, India and China are preparing to reinstate direct passenger flight services after a five-year suspension, a move expected to enhance trade, tourism, and broader economic engagement.

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Before the suspension in 2020, bilateral air traffic was significant, with 816,000 passengers in FY 2019 and 770,000 passengers in FY 2020. By comparison, India–US passenger traffic was approximately 1.1 million in FY 2020. Cargo flows were also substantial, with 30,000 tonnes transported annually between India and China, versus 17,700 tonnes between India and the US. Since 2020, travelers and cargo operators have relied on indirect routes through Hong Kong, Thailand, and Singapore, which increased both transit time and costs.

The anticipated resumption of flights aligns with other signs of improving ties.

Restoring direct routes is expected to meet strong pre-pandemic demand for business and leisure travel, streamline cargo movement, and contribute to broader economic normalization. This step reflects a pragmatic effort to rebuild connectivity and cooperation while navigating ongoing geopolitical complexities.

Modi to visit China for the SCO Summit

Indian Prime Minister Narendra Modi is scheduled to visit Tianjin, China, on August 28, 2025, to attend the SCO Summit. The SCO is a regional grouping that promotes cooperation in security, trade, and political affairs, with members including China, Russia, and several Central Asian nations.

This visit marks Modi’s first trip to China since the 2020 military standoff in eastern Ladakh and is expected to be closely monitored for signs of a gradual thaw in bilateral relations.

The renewed diplomatic engagement builds on an understanding reached in October 2024, when Modi and Chinese President Xi Jinping met on the sidelines of the BRICS summit and agreed on restoring border peace.

Modi in a bilateral meeting with Xi Jinping on the sidelines of the 16th BRICS Summit at Kazan, in Russia, on October 23, 2024.

The continuation of this agreement has created space for higher-level interactions, making the upcoming visit a potentially significant moment in the trajectory of India–China relations.

India-China trade activities over the year

Trading points between India and China were closed during the COVID-19 pandemic, coinciding with a sharp deterioration in bilateral ties following violent clashes in the Himalayas. The trade surplus is heavily skewed in China’s favor, with the deficit widening from US$44.03 billion in FY 2020–21 to US$99.20 billion in FY 2024–25.

Trade Relations Year-on-Year (Value in US$ Million)
Trade activities	2020-21	2021-22	2022-23	2023-24	2024-25
India’s exports to China	21,187.15	21,259.79	15,306.10	16,658.91	14,252.10
% Growth	–	0.34	-28.00	8.84	-14.45
India’s imports from China	65,212.25	94,570.57	98,505.77	101,735.76	113,456.63
% Growth	–	45.02	4.16	3.28	11.52
Total trade	86,399.40	115,830.36	113,811.87	118,394.67	127,708.73
Trade balance	-44,025.10	-73,310.78	-83,199.66	-85,076.85	-99,204.53

Source: Department of Commerce, Ministry of Commerce and Industry, GoI.

India’s exports to China have declined for two consecutive years, falling 14.45 percent in FY 2024–25 to US$14.25 billion. Major export categories such as iron ores and concentrates, unwrought aluminum, and granite registered steep declines.

India’s Exports to China (Value in US$ Million)
Commodity	FY 2023-24	FY 2024-25	% Growth
Iron ores and concentrates, including roasted iron pyrites iron ores and concentrates, other than roasted iron	3,635.94	1,885.18	-48.15
Unwrought aluminium	329.01	204.71	-37.78
Fish frozen excluding fish fillets and other fish meat of heading no. 0304	299.10	254.93	-14.77
Electrical apparatus for line telephony/telegraphy, including telephone sets with cordless handset carrier-current line system and videophones	259.01	444.09	71.45
Pepper of the genus piper; dried or crushed or ground fruits of the genus capsicum or of the genus pimenta pep	498.14	450.91	-9.48
Other fixed vegetable or microbial fats and oils (incl. jojoba oil) and their fractions, whether or not refined, but not chemically modified	478.25	509.16	6.46
Flours, meals, and pellets of meat or meat offal, of fish or of crustaceans, molluscs or other aquatic invertebrates	164.70	113.31	-31.20
Granite, porphyry, etc., and other monumental/building stone w/n roughly trimmed/merely cut into blocks/slabs of a rectangular	365.69	302.49	-17.28
Petroleum oils and oils obtained from bituminous minerals other than crude propane, containing 70% or more by weight of these oils	1,162.78	1,262.75	8.60
Cyclic hydrocarbons	178.84	215.93	20.74

Source: Department of Commerce, Ministry of Commerce and Industry, GoI.

In terms of imports, India’s imports from China rose 11.52 percent in FY 2024–25 to US$113.46 billion, driven by strong growth in transmission shafts and bearings, air/vacuum pumps and compressors, and automatic data processing machines.

India’s Imports from China (Value in US$ Million)
Commodity	FY 2023-24	FY 2024-25	% Growth
Started acyclic monocarboxylic acids and their anhydrides, halides, peroxides, and peroxy acids; the halogenated, sulfated, nitrated/nitros	546.61	602.81	10.28
Heterocyclic compounds with nitrogen	2,551.96	1,759.75	-31.04
Antibiotics	1,687.87	1,747.40	3.53
Mineral or chemical fertilizers containing two or three of the fertilizing elements — nitrogen (N), phosphorus (P), and potassium (K); other similar fertilizers in tablet form or similar packages.	1,398.90	710.62	-49.20
Air/vacuum pumps, air/other gas compressors and fans; venting/recycling hoods incorporating a fan, whether or not fitted with filters	1,242.02	1,475.20	18.77
Automatic data processing machines and units	5,125.60	5,653.99	10.31
Electric accumulators, including separators, therefore within rectangular	2,508.53	2,565.88	2.29
Semiconductor devices (diodes, transistors, transducers); photosensitive semiconductor devices; photovoltaic cells, whether or not assembled in modules or panels; light-emitting diodes (LEDs).	4,431.54	3,627.62	-18.14
Transmission shafts and cranks; gears; ball screws; bearing housing and other plain shaft bearings; speed changers, including torque converters	795.56	963.35	21.09
Unrefined copper; copper anodes for electrolytic refining	0.05	0.00	-99.99

Source: Department of Commerce, Ministry of Commerce and Industry, GoI.

India’s import profile from China remains dominated by high-value manufactured goods and technology components, while exports are concentrated in raw materials, agricultural products, and select industrial goods.

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India’s manufacturing ambitions rely on Chinese supply chains for critical components such as electric vehicles, solar panels, and pharmaceutical inputs. Analysts believe this dependence may increase in the near term. Conversely, China is seeking to diversify its export markets amid the risk of reduced access to US consumers, with India’s vast domestic market presenting an attractive alternative.

Conclusion

Parallel moves to reopen border trade, restore direct flights, and engage at the highest political level signal a measured but meaningful thaw in India–China relations after years of tension. While structural trade imbalances persist, renewed dialogue and connectivity initiatives could lay the groundwork for broader economic cooperation. The upcoming SCO Summit in Tianjin will be a pivotal test of whether these steps translate into sustained trust-building and a more balanced partnership between the two Asian powers.

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