Can India Use Its Market Power To Gain Leverage In Border Talks With China? Check Expert’s Take | India News

India’s trade deficit with China is increasing every year. Although there is a marginal increase in exports to China, this is not enough to close the gap. India’s exports to China will rise by $5.5 billion in 2025, reversing the broader downward trend, according to data released by Chinese customs. Despite this increase, the overall trade deficit remained high. China’s exports to India also increased by 12.8% last year, reaching 135.87 billion dollars. Bilateral trade overall has risen to an all-time high of $155.62 billion in 2025, even as both countries face tariff increases imposed by U.S. President Donald Trump.

In fiscal year 2024-25, India’s trade deficit with China widened sharply to a record $99.2 billion due to rising imports and falling exports. Imports from China increased by 11.5% to 113.5 billion dollars, from 101.7 billion dollars the previous year, led by electronics, electric batteries and solar cells.

This came at a time when both India and China were making diplomatic statements about the Shaksgam Valley. While Pakistan handed over the occupied territory to China long ago, India retained its rights over the region. Shaksgam Valley is not the only flashpoint between the two neighbours. India and China share the world’s largest disputed border called the Line of Actual Control (LAC). Therefore, following its expansionist policy, China generally claims Indian territory from Arunachal Pradesh to Ladakh and PoK. In contrast, India is only making diplomatic tough talk, which is not enough to deter Beijing.

At this point, critics question why India cannot use its purchasing power at the negotiating table, despite being one of China’s largest markets.

Captain (retired) Shyam Kumar, defense and strategic analyst from the Indian Navy, said India considers China’s claims on Indian territory as illegal and does not recognize the 1963 Shaksgam Valley agreement. He also noted that a large part of Ladakh was under illegal occupation by China. Captain Kumar added that the lack of a clearly defined border has resulted in various attacks by China in the past.

Talking about the trade deficit, the defense expert said, “India has a huge trade deficit with China. More than 60% of India’s total imports come from China. In the current context, any move to use purchasing power as a tool to balance land disputes by reducing imports will create shortages in daily products and reduce trade volume. The dependence of the Indian market on China will lead to increased unemployment and businesses will be adversely affected if the status quo is deliberately disrupted.”

He said that China will be able to absorb the damage in a short time, but the reputation of the Indian economy in the international market will suffer greatly.

“India regards the border areas as non-negotiable in terms of national security and identity. However, currently the trade imbalance in volume is in China’s favor and does not provide India with the necessary negotiating power in territorial/border dispute resolutions. However, as India’s economy grows, its drive to become self-sufficient by increasing domestic production and its large, young and growing workforce compared to China’s aging population are positive indicators,” he said.

He said higher GDP growth rates of India compared to China’s slowing pace, relocation of manufacturing companies out of China, India becoming a preferred destination as an alternative manufacturing hub and increased exports will definitely strengthen India at the negotiating table, albeit in the long run.

Additionally, India is heavily dependent on Chinese imports for products such as electronics, pharmaceutical supplies and machinery. This weakens India’s ability to apply pressure without harming itself. For China, the Indian market is important but not irreplaceable. China can direct its exports to Southeast Asia, Africa and Latin America. This reduces India’s bargaining power.