Beyond Rhetoric, India-China Business Goes Uninterrupted

Sources said there was no plan to curb imports from China to ensure that there is no disruption in the broader economy, especially for raw materials and high value goods, including electronics. 

Not just the large companies, but a host of micro small and medium enterprises (MSMEs) are also dependent on imported raw materials from China. India’s imports from China in 2024 stood at almost US$ 113.45 billion with a trade deficit of US$ 99.2 billion.

“China is a neighbouring country and an economic power, we will maintain our economic ties with it,” Gopal Krishna Agarwal, BJP’s national spokesperson on economic affairs told The Secretariat.

Despite voices emphasising a reduction in dependence on China, trade between the two neighbours has been steadily rising, and Beijing continues to be India’s second-largest trading partner.

What has come as a relief for many is a thawing in bilateral ties between the two countries.  

Agarwal said that the government’s focus is on boosting domestic economic growth and manufacturing. “The government will not do anything that derails the economic growth process,” he said.

On Wednesday, rating agency Moody’s, in its report, said that compared to many emerging economies, India is in a better position to deal with the implications of US tariffs. Private consumption, expansion of manufacturing capacity with increased infrastructure spending will help cushion India’s economic growth momentum, the report said.

“India is better positioned than many other emerging markets to deal with US tariffs and global trade disruptions, helped by robust internal growth drivers, a sizeable domestic economy and a low dependence on goods trade,” Moody’s said.

India’s Oil Demand

The rating agency also said that domestic economic growth will drive India’s oil demand and that it will surpass China. Not only is the dragon witnessing a slowdown in its economic growth, the rise in domestic demand for electric vehicles is also a factor for it.

“Whatever be the case, India will be in the spotlight as far as global oil demand goes,” a government official said.

The fall in crude oil prices and a forecast of a normal monsoon will help in keeping inflation in control, something that also provides relief to the country’s policymakers. This will also give the Reserve Bank of India room to further reduce interest rates as and when required to cushion the economy.

The RBI has also slashed domestic growth projections from 6.7 per cent to 6.5 per cent for 2025-26.