India and China are restoring economic links strained by a deadly 2020 border clash, the latest sign Prime Minister Narendra Modi is drawing closer to BRICS after Trump hit the nation with a 50% tariff
India and China are moving to repair economic ties that had been severely strained since a deadly 2020 border clash, signaling Prime Minister Narendra Modi’s pivot toward closer engagement with BRICS nations in the wake of US President Donald Trump’s decision to impose a steep 50% tariff on Indian goods.
Modi’s latest step is to restart direct flights with China as early as next month, according to people familiar with the matter who requested anonymity to discuss ongoing negotiations. A formal announcement could come during Modi’s planned trip to China — his first in seven years — where he is expected to meet Xi Jinping at the Shanghai Cooperation Organisation summit in Tianjin from August 31.
Air links between the two nations were cut during the Covid-19 pandemic, a period that also saw relations nosedive after clashes in the Himalayan border region left 20 Indian soldiers and an undisclosed number of Chinese troops dead. The renewed dialogue comes after Trump’s decision earlier this month to double tariffs on Indian imports as punishment for New Delhi’s continued purchases of Russian oil. The move was accompanied by sharp remarks from Trump, who labeled India’s economy “dead” and called its tariff barriers “obnoxious.”
The tariff escalation was a major blow to India’s trade outlook, especially given that the US remains its largest trading partner. It also marked a personal setback for Modi, who had previously offered public praise for Trump and was among the first world leaders to visit him after his return to the White House.
Henry Wang, president of the Center for China and Globalization in Beijing, said the relationship between India and China is now in an “up cycle,” noting that as influential members of the Global South, “they have to really speak to each other.” Wang added that Trump’s aggressive tariff policy has likely reinforced India’s need to preserve “strategic autonomy and strategic independence” in its global dealings.
China, also a frequent target of Trump’s trade measures, has been signaling openness to improved ties. This month, Beijing eased restrictions on urea exports to India, the world’s largest buyer of the fertilizer. While initial shipments are modest, the trade could grow, helping to stabilize global supply and prices.
In another potential link, India’s Adani Group is in talks with Chinese electric vehicle leader BYD Co. to manufacture batteries domestically, furthering its clean energy ambitions. Meanwhile, Modi’s government has recently lifted long-standing curbs on tourist visas for Chinese nationals, underscoring Beijing’s importance as India’s second-largest trading partner after the US and a crucial supplier of inputs for its manufacturing sector.