Prime Minister Narendra Modi and Chinese President Xi Jinping discussed structural trade imbalances and supply chain issues during their meeting on September 12, 2026, in Delhi. India’s trade deficit with China widened to $167.6 billion in 2025, a significant increase from $87.5 billion in 2021, due to imports rising by about 71% while exports remained stagnant. This imbalance highlights the paradox of India's Atmanirbhar Bharat mission, which aims to reduce dependence on global supply chains but finds itself increasingly reliant on Chinese intermediate and capital goods.
Written locally by qwen2.5:14b on 2026-09-21,
using this article's own text rather than the other coverage of the
same event (that is the story summary below).
Story summary
In a meeting on September 12, 2026, during the BRICS summit in Delhi, Indian Prime Minister Narendra Modi and Chinese President Xi Jinping discussed addressing concerns including "structural trade imbalance and supply chain issues." This discussion highlights the paradox in India's Atmanirbhar Bharat mission, initiated in 2020 to boost domestic manufacturing and reduce reliance on global supply chains, particularly those centered around China. Despite India's growing manufacturing capacity, its expansion remains heavily reliant on Chinese imports, leading to a significant trade deficit. Bilateral trade between the two nations reached $167.6 billion in 2025, but this has become increasingly lopsided: while exports to China remained largely stagnant, imports from China surged by about 71%, rising from $87.5 billion to $149.5 billion between 2021 and 2025. This imbalance underscores the challenge of achieving self-reliance without becoming overly dependent on Chinese supply chains.
Written for “India China Trade Dynamics” on 2026-10-04,
grounded in this article and the 0 other(s) covering the same event.
After the bilateral meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping on the sidelines of the BRICS summit in Delhi on September 12, 2026, India said the two leaders had underlined the need to address each other’s concerns, including “structural trade imbalance and supply chain issues”.
asserted
leaders → say → imbalance
This assumes significance as the widening trade deficit with China reveals a central paradox in India’s ambitious Atmanirbhar Bharat mission, launched in 2020 to bolster domestic manufacturing and reduce dependence on global supply chains, with China as the implicit target.
asserted
deficit → assume → target
India is steadily building its manufacturing and export capabilities.
asserted
India → build → capabilities
But that expansion remains deeply embedded in China-centric, import-dependent supply chains — creating what may be called the “assembly trap” of self-reliance.
uncertain
what → remain → reliance
Bilateral trade touched $167.6 billion in 2025 but has become increasingly asymmetric, with imports from China rising much faster than India’s exports.
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imports → touch → exports
Exports to China remained broadly stagnant between 2021 and 2025, while imports rose sharply by about 71% from $87.5 billion to $149.5 billion in the same period — highlighting persistent structural weaknesses in India’s manufacturing and trade competitiveness.
asserted
imports → remain → competitiveness
That composition shows that the India-China trade deficit is not simply a consequence of Indian consumers buying Chinese finished products.
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consumers → show → products
It reflects deeper structural asymmetries in manufacturing capability and technological dependence, with India’s reliance on Chinese supply chains extending deep into the manufacturing system as inputs, components and semi-processed goods.
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reliance → reflect → inputs
The trends in India’s top five import categories from China between 2021 and 2025 reveal that this reliance has deepened rather than diversified, despite initiatives such as Make in India, the Production-Linked Incentive (PLI) scheme and the Phased Manufacturing Programme (PMP).
asserted
reliance → reveal → India
The combined value of top five categories of imports rose from $19 billion in 2021 to $34.6 billion in 2025 — close to one-fourth of total imports from China, showing that India’s import basket has become more concentrated in a few electronics-related categories rather than more diversified.
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basket → combine → categories
That telecom equipment, laptops and integrated circuits remain in the top five shows that India’s electronics assembly, though expanded, is still structurally exposed to Chinese supply chains.
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assembly → integrate → chains
India has emerged as a major hub for mobile phone assembly, but the share of imported parts and components has risen sharply from 3.3% of the import basket in 2022 to 10.1% in 2025 — revealing the contradiction in that success story: it has been shaped, at least so far, by downstream assembly rather than by a deep domestic component ecosystem.
Imports of sophisticated inputs and capital goods can facilitate industrial upgrading, but they become problematic when the dependence turns structurally persistent and domestic firms fail to build capability in semiconductors, integrated circuit design, displays and other precision components.
Such deepening dependence not only exposes the limits of initiatives to boost domestic manufacturing, but also questions their effectiveness.
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dependence → emerge → effectiveness
Financial incentives under PLI or PMP may partly address India’s scaling and investment problems, but cannot alone resolve the structural and capability challenges.
uncertain
incentives → address → challenges
That requires shifting focus from incentivising assembly to building domestic technological capability, innovation, supplier networks and component ecosystems.
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That → require → capability
The response should not be blanket import restrictions but calibrated tariffs on parts and components, designed to nurture the upstream segments of domestic manufacturing value chains.
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response → calibrate → chains
India should focus on guarded globalisation — enhancing access to global value chains while building domestic manufacturing capabilities, so that critical technological dependencies do not harden into strategic vulnerabilities.
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dependencies → focus → vulnerabilities
This is the best pathway to address trade asymmetries with China and realise the vision of a truly self-reliant India.
asserted
This → address → India
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