Prime Minister Narendra Modi and Chinese President Xi Jinping will meet in New Delhi on Saturday evening, with bilateral economic relations expected to feature prominently in their discussions.
The two leaders are likely to examine trade and investment ties, particularly India’s widening merchandise trade deficit with China.
The meeting comes as bilateral commerce reaches a record level, highlighting both the scale of economic engagement and the persistent imbalance.
India’s exports to China increased 36.62 per cent to $19.47 billion during FY2025-26 from $14.25 billion in the previous financial year.
Imports grew 16.03 per cent to $131.63 billion from $113.46 billion. As a result, India’s trade deficit with China expanded to $112.16 billion from $99.21 billion.
Overall merchandise trade between the two countries climbed 18.31 per cent to $151.10 billion.
China overtook the United States to become India’s largest trading partner.
The trade gap extends beyond consumer products, as Indian manufacturers depend heavily on Chinese industrial inputs, components and capital goods.
Electronics, machinery, computers and organic chemicals together account for about 66 per cent of India’s imports from China.
According to GTRI, China supplies nearly 43 per cent of India’s electronics imports and around 40 per cent of machinery and computer imports.
India relies significantly on China for critical minerals needed across strategic industries.
China supplies more than 40 per cent of imports across six key critical minerals. This dependence creates vulnerabilities for renewable energy, electric vehicles and defence manufacturing.
GTRI has warned that the structural imbalance could expose sectors such as clean energy, electronics and pharmaceuticals to supply disruptions. This risk could increase if China restricts access to critical raw materials.
China could seek greater investment access for its companies in India during the meeting.
New Delhi’s approach to Chinese investments and supply-chain dependence may therefore remain an important part of the broader economic dialogue.
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