Trade between India and China has nearly doubled in five years to $151 billion annually, leaving India with a widening deficit as it buys roughly seven times more from China than it sells. Despite a 2020 Himalayan border clash that killed at least 24 soldiers and froze high-level diplomacy, Chinese imports remain essential to Indian industry — from rare-earth magnets for electric vehicles to pharmaceutical ingredients. Xi Jinping visits India for the first time in over six years for the BRICS summit, where trade imbalances will feature alongside border disputes.

India's industrial ambitions depend heavily on Chinese goods, exposing it to strategic risks while making it harder for domestic firms to compete. With U.S.-Israeli war with Iran driving up energy costs, Chinese imports are widening India's global trade deficit and weakening its currency. China's record $1.2 trillion trade surplus last year has deepened global concerns, with U.S. Treasury Secretary Scott Bessent accusing China of blocking a G20 statement on excessive surpluses.

After 2020, India banned TikTok and restricted Chinese investment, hoping to attract supply chains leaving China. Instead, Vietnam captured much of that investment. Shekhar Aiyar of the Indian Council for Research on International Economic Relations argues India should "aggressively invite Chinese firms in" to critical sectors like green technology and semiconductors, where China holds a 30% cost advantage. Santosh Pai, a New Delhi lawyer advising both Chinese and Indian companies, notes Vietnam secured large-scale manufacturing that India missed.