Discussions are underway between India and China to resume border trade in domestic goods, marking a potential end to a suspension lasting over five years.
This development, reported by Bloomberg News on Thursday, cites officials in New Delhi familiar with the negotiations. The planned resumption represents a significant step towards normalising economic relations between the two Asian neighbours, occurring alongside broader efforts to ease border tensions that have persisted since the 2020 military standoff.
The prospective trade talks are expected to focus on essential commodities, with rare earth magnets, fertilisers, and pharmaceuticals identified as the top three priority items on the agenda.
These discussions signal a notable thaw in bilateral relations, particularly significant given the timing of strained trade relations between India and the United States over recent tariff impositions. A successful agreement would benefit Indian companies seeking expedited imports of crucial production inputs from China.
Recently, China eased restrictions on shipments of urea and certain other fertilisers to India. State trading enterprises have reportedly issued tenders for importing limited quantities of these essential agricultural inputs.
However, challenges remain regarding specialty fertilisers like calcium nitrate and mono ammonium phosphate, approximately 80% of which India traditionally imports from China, as well as rare earth magnets critical for manufacturing sectors including electric vehicles.
Export licenses for Chinese vendors supplying these magnets to India have not yet been reinstated, despite resumption of shipments to other destinations including the United States, Europe, and Southeast Asia.
Geopolitical context and border dynamics
The timing of these trade discussions is closely aligned with diplomatic engagements, potentially culminating during Prime Minister Narendra Modi’s anticipated visit to China for the Shanghai Cooperation Organisation (SCO) summit in Tianjin, scheduled from 31 August to 1 September.
Officials from both nations are expected to meet later this month, with the Chinese Foreign Ministry expressing willingness to “step up communication and coordination with India” on resuming border trade. Beijing acknowledged that “border trade between China and India has long played an important role in improving lives of the two countries’ border residents.”
Both nations have proposed restarting trade through designated points along their shared 3,800-kilometre border, which remains poorly demarcated and has been disputed since the 1950s. The border trade suspension originated amidst heightened military tensions after the deadly 2020 clash in the Galwan Valley.
Recent months have seen diplomatic efforts intensify, including Indian Foreign Minister Subrahmanyam Jaishankar’s July meeting in Beijing where he stressed that avoiding “restrictive trade measures” was vital for normalising ties.
