‘India, China open to talks to address trade imbalance, supply chain issues’
Government officials indicated that India and China are open to continued engagement on addressing the structural trade imbalance between the two countries as well as supply-chain concerns, describing it as a work in progress.
The remarks followed bilateral discussions held on the sidelines of the BRICS Summit hosted in New Delhi, where the two countries' leaders met, and India's Commerce Minister held a separate meeting with his Chinese counterpart.
Restrictions on Chinese exports of rare earth elements and other critical minerals to India were flagged as a continuing concern for Indian industry and supply-chain resilience.
Officials characterised the overall tenor of engagement on trade matters as positive, without announcing specific new agreements or timelines.
India-China Trade Imbalance
India runs a large and persistent merchandise trade deficit with China, its largest bilateral goods-trade deficit with any single country, driven by heavy import dependence on Chinese electronics, machinery, active pharmaceutical ingredients (APIs), and industrial inputs, while Indian exports to China (engineering goods, petroleum products, chemicals, iron ore) remain comparatively narrow. This asymmetry has made "rebalancing" trade — including through India's Production-Linked Incentive (PLI) schemes aimed at import substitution in electronics and APIs — a recurring theme in bilateral economic dialogue and a subject flagged periodically by parliamentary standing committees and the Department for Promotion of Industry and Internal Trade (DPIIT).
The officials' reference to "structural trade imbalance" describes precisely this persistent deficit pattern, and continued bilateral talks are aimed at addressing both market-access asymmetries and the underlying import-dependence that sustains it.
Rare Earth Elements and Critical Mineral Supply Chains
Rare earth elements (REEs) — a group of 17 chemically similar elements used in magnets for electric vehicle motors, wind turbines, electronics, and defence systems — are heavily concentrated in global supply from China, which controls the large majority of global REE processing and refining capacity even where raw ore is mined elsewhere. Export curbs or licensing restrictions by China on REEs and related magnets have been identified as a specific vulnerability for India's electronics, EV, and renewable-energy manufacturing base, prompting India to pursue diversification through its National Critical Mineral Mission and engagement in groupings such as the Minerals Security Partnership.
Key Details
- China accounts for the dominant global share of rare earth refining/processing capacity, though its share of raw ore mining, while still largest, is less dominant.
- India launched the National Critical Mineral Mission (approved by the Union Cabinet in January 2025) to secure domestic exploration, processing, and overseas critical-mineral asset acquisition.
- "Critical minerals" for India include a notified list (finalised by the Ministry of Mines) covering elements such as lithium, cobalt, nickel, and rare earths, essential for clean energy and defence technologies.
Supply-chain concerns raised in the talks directly reference China's rare-earth and critical-mineral export posture, which India has been diplomatically engaging China on — both commercially (industry-to-industry supply assurances) and through government channels — given the strategic risk of reliance on a single-country supply source.
BRICS as a Platform for Bilateral Engagement
BRICS is an intergovernmental grouping formed in 2009 (as "BRIC," with Russia hosting the first summit), joined by South Africa in 2010 to become BRICS; the grouping was significantly expanded in 2024 to admit Saudi Arabia, Iran, the UAE, Egypt, Ethiopia, and Argentina (with Argentina later opting out), making it a wider "BRICS+" formation. Though BRICS itself has no permanent secretariat, its annual Summit and associated ministerial/business-forum tracks provide a recurring venue for member states — including India and China, both founding members — to hold structured bilateral meetings alongside the multilateral agenda, distinct from formal bilateral treaty mechanisms.
Key Details
- Founding BRIC summit: 2009 (Russia); South Africa joined 2010; major expansion took effect 2024.
- BRICS's key financial institution, the New Development Bank (NDB), began operations in 2014 and is headquartered in Shanghai.
- The 2026 BRICS Summit was hosted by India in New Delhi, providing the sideline venue for the reported India-China trade discussions.
The bilateral trade discussion took place on the margins of this multilateral summit rather than through a dedicated bilateral trade dialogue mechanism, illustrating how BRICS functions as an informal venue for members to advance separate bilateral agendas alongside its own institutional work (e.g., the NDB).
- China is among India's largest trading partners by total trade value; India runs its largest single-country merchandise trade deficit with China.
- India's exports to China rose sharply in FY26, led by engineering/electronic goods, petroleum products, chemicals, and iron ore.
- National Critical Mineral Mission: approved by the Union Cabinet in January 2025, aimed at securing critical mineral supply chains including rare earths.
- BRICS: founded 2009 (as BRIC); South Africa joined 2010; expanded to include six additional nations from 2024; New Development Bank headquartered in Shanghai, operational since 2014.
- The 2026 BRICS Summit was held in New Delhi, the setting for the reported bilateral trade discussions between India and China.