India-China Trade
FDI Reset and Trade Balance Dynamics
The backdrop to the Parliament trade data includes the Union Cabinet's March 10, 2026 decision to relax Press Note 3 (PN3) FDI restrictions for China in selected manufacturing sectors. This relaxation reflects a broader diplomatic and economic reset in India-China relations following the 2024–25 disengagement along the Line of Actual Control (LAC), and acknowledges that Indian manufacturing — particularly in electronics and solar — cannot achieve import substitution without access to Chinese capital and technology for upstream components.
- PN3 relaxation (March 2026): Chinese FDI allowed through automatic route up to 10% beneficial ownership in capital goods, electronic components, solar manufacturing inputs (polysilicon, ingot-wafer).
- The relaxation targets Indian dependence on Chinese imports for manufacturing inputs — allowing Chinese investment to produce those inputs locally.
- India's imports from China in FY25: $113.45 billion (+11.52% YoY); exports to China in FY25: $14.25 billion (−14.5% YoY) — showing the fiscal-year trend is more mixed than calendar-year data.
- Calendar year 2025 exports to China grew 9.7%, but fiscal year 2024-25 exports fell 14.5% — reflecting timing and commodity price fluctuations (iron ore, naphtha).
● Tracked since March 13, 2026 · last seen September 20, 2026 · updates as the daily brief publishes
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