Tariff'ic' turn: India, China to start trade talks soon; how Donald Trump may have sparked the thaw
Despite Beijing's backing of Pakistan during Operation Sindoor in the wake of the Pahalgam terror attack, the recent easing of tensions between New Delhi and Beijing can be traced, in part, to Trump's actions, though he has claimed no credit.
The resumption of border trade after a five-year freeze, Prime Minister Narendra Modi's likely attendance at the Shanghai Cooperation Organisation summit for the first time since 2018, and agreements to restart direct flights and issue tourist visas, as reported by AFP, all point to a new dawn in South Asian economic and geopolitical dynamics, a shift taking shape mostly due Trump's tariff pressure.
Border trade wheels rolling again
As the two economic giants have long competed for dominance in the South Asian economy, a recent shift in their approach towards trade paints a different picture.
Ministry of external affairs on Thursday informed that India had started talks with China on "resumption of border trade through designated trade points - namely Lipulekh Pass in Uttarakhand, Shipki La Pass in Himachal Pradesh, and Nathu La Pass in Sikkim.
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250% pharma tariff trauma-bond
With the looming tariff threat of 250% as proposed by Donald Trump, India and China are expected to begin discussions on a trade package involving pharmaceuticals, as well as the supply of essential rare earth magnets, fertilizers.
While initial outreach is under way, shipments of rare earth magnets and all fertilizers from China have yet to resume.
Ahead of the SCO summit, the commerce ministry has called a meeting with leading pharmaceutical industry representatives to explore collaboration and deepen ties with China as part of wider cooperation efforts.
Industry experts told ET that while details remain undisclosed, the talks may address strategies to offset the impact of US tariffs.
The urea eureka!
China, which once was major urea exporter, and had sharply curtailed its overseas shipments of the nitrogen-based fertilizer in recent years, has now decided to ease curbs on urea exports to India.
India, the world's largest urea importer, is set to receive about 300,000 tons, according to sources cited by Bloomberg.
In 2023, almost half of China's urea exports went to India, but shipments to all destinations ceased last year. Although Beijing relaxed restrictions in June, it kept certain curbs on exports to India in place until now.
India's large agricultural sector and shortfall in domestic production make sizable imports essential to ensure farmers have a steady supply of fertilizer. The country heavily subsidizes urea, a key soil nutrient critical to boosting yields of major crops.
China 'welcomes' PM Modi
Calling it a gathering of "friendship" China recently said that it "welcomed PM Modi to attend the Shanghai Cooperation Organization (SCO) Summit in Tianjin later this month.
"China welcomes Prime Minister Modi to China for the SCO Tianjin Summit," country's foreign ministry spokesperson Guo Jiakun said.
'We believe that with the concerted effort of all parties, the Tianjin summit will be a gathering of solidarity, friendship and fruitful results,' he said.
This marks PM Modi's first trip to China since the 2020 Galwan Valley clash and comes against the backdrop of persistent trade tensions with the United States. The SCO Summit offers a crucial forum for member states to address regional security, strengthen economic cooperation, and tackle broader geopolitical challenges.
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