India and China are taking steps to restore economic relations strained by a deadly 2020 border clash, Bloomberg reports, as Prime Minister Narendra Modi seeks closer ties with BRICS nations following US tariff actions.
According to people familiar with the matter, India plans to resume direct flights with China as early as next month, with airlines already briefed on the proposal. Flights had been suspended during the Covid-19 pandemic, coinciding with heightened tensions after border clashes in the Himalayas killed 20 Indian soldiers.
The thaw in relations comes after US President Donald Trump doubled tariffs on Indian goods to 50% this month in response to India’s purchase of Russian oil. Trump’s comments, describing India’s economy as “dead” and its tariff barriers “obnoxious,” intensified pressure on New Delhi, India’s largest trading partner.
Experts see the India-China rapprochement as a strategic move. Henry Wang, president of the Beijing-based Center for China and Globalization think tank, told Bloomberg that relations are in an “up cycle,” with both nations seeking strategic autonomy amid global trade tensions.
China has shown signs of easing restrictions, including lifting curbs on urea shipments to India, the world’s largest fertilizer importer, while initial volumes remain limited. Additionally, India has recently allowed tourist visas for Chinese nationals, and Modi may meet Chinese President Xi Jinping at a summit in Tianjin starting August 31.
Economic cooperation is also extending to the private sector. Bloomberg sources indicate that India’s Adani Group is exploring a partnership with Chinese EV giant BYD Co. to manufacture batteries in India and expand clean energy initiatives.
Despite the thaw, trust between the two Asian powers remains cautious. Longstanding rivalry and recent Chinese support for Pakistan in military disputes continue to cast shadows over bilateral relations.
Meanwhile, Modi is bolstering ties with other BRICS members. In August, he invited Russian President Vladimir Putin to India as relations with the US have cooled, and discussions with Brazilian President Luiz Inacio Lula da Silva are focusing on expanding trade deals with Mercosur.
Bloomberg notes that India has emerged as a top buyer of discounted Russian crude, further complicating relations with the US while underscoring New Delhi’s pursuit of economic independence and strategic partnerships beyond Washington.
