How Will India Strengthen Trade Ties with China?

New Delhi, Aug 31 (NationPress) Following a meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping on Sunday during the Shanghai Cooperation Organisation (SCO) summit in Tianjin, there is potential for India to enhance its trade connections with China. This comes amid ongoing pressures from the United States concerning tariffs and its ties with Russia, as reported.

India is currently investigating trade prospects with China in sectors such as fertilisers, rare earth minerals, electronics manufacturing, and foreign direct investment.

This initiative arises as Washington has enforced an additional national security tariff of 25% on Indian imports, raising the total duty to 50% starting from August 27.

A major worry for India is the supply of fertilisers. Earlier this month, Beijing removed restrictions on the export of Di-Ammonium Phosphate (DAP) fertilisers, rare earth magnets, and tunnel boring machines after External Affairs Minister S. Jaishankar discussed the concern with his Chinese counterpart Wang Yi.

Shipments have already commenced, offering temporary relief to both Indian farmers and industries. India heavily relies on China for nearly 95% of its specialty fertiliser requirements.

Approximately 80% of these imports are sourced directly from China, while the remaining 20% is procured through intermediaries.

The previous suspension of supplies had increased prices by 40%. As the demand season for crops like grapes and bananas approaches in September, renewed restrictions could further hike fertiliser costs, directly impacting farmers.

China's export limitations on fertilisers had already caused disruptions during the Rabi season, while restrictions on rare earths raised concerns for the automotive and electronics sectors. Delays in tunnel boring machines also hindered infrastructure projects.

Rare earth minerals represent another critical aspect of the discussions. These minerals are essential for manufacturing magnets utilized in batteries, motors, and sophisticated electronics.

Earlier this year, Chinese restrictions led to bottlenecks, jeopardizing production lines in India. Thus far, there has been little significant progress in alleviating these export regulations.

As India navigates its relationships with both Washington and Beijing, the recent discussions may be vital for securing a steady supply of essential industrial inputs. However, the upcoming months will determine how China manages its export restrictions.

Over the past months, India and China have taken various steps to mend their relations, which had been severely strained following the deadly Galwan Valley clashes between their troops in June 2020.