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  4. Except trade, little integration between India and China

Except trade, little integration between India and China

India runs a growing trade deficit with China, and tourism has taken a significant hit since the Galwan clashes—there were about 31,000 arrivals from China in 2023 as against 340,000 in 2019

By Samreen Wani
Published: Aug 8, 2025 02:11:59 PM IST
Updated: Aug 8, 2025 02:34:42 PM IST

(File) India's Prime Minister Narendra Modi (R) and Chinese President Xi Jinping looking on along the East Lake, in Wuhan. Image: Handout / PIB / AFP (File) India's Prime Minister Narendra Modi (R) and Chinese President Xi Jinping looking on along the East Lake, in Wuhan. Image: Handout / PIB / AFP

 

Tepid investment, decreased people to people contact and declining tourist interest typify India-China relations. Apart from trade, where India runs a growing deficit with China, there is limited interaction between the two countries, especially since the Galwan clashes in June 2020.

 

FDI inflows from China dropped 94 percent from $164 million in FY20 (before the Galwan clashes) to $10.5 million in FY23 before rising again in FY24, according to data from the Department for Promotion of Industry and Internal Trade. However, just about $3 million was invested into India in FY25.   

 

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Overall FDI inflows from China constitute less than 1 percent of the total investments coming into India. Similarly, less than 1 percent of what Indians invest overseas happens in China; overseas direct investment since 2000 adds up to a little over $930 million.

                                                                                                                  

As far as trade is concerned, however, India continues to import more from China which has doubled the trade deficit from $49 billion in FY20 to over $99 billion in FY25. This is perhaps also reflected in increased cargo movement from China into India. Over 5,300 tonnes of freight originating in China entered India in the first quarter of 2025, an 108 percent increase compared to the same quarter in 2020. Cargo travelling from India, however, declined by 73 percent in the same period.

 

Overall, China accounts for almost 3 percent of all the cargo coming into the country.

Though border clashes and strategic mistrust have strained relations between the two countries, uncertainty in US trade policy could propel both India and China to find common ground. Some media reports suggest Prime Minister Modi is likely to travel to China for the SCO Summit, a first since 2019.

Also read: India can be the world's China-plus-one, but China is not to be dismissed: Deloitte APAC CEO

 

In a significant move, the Kailash Mansarovar Yatra was resumed this year, after it was suspended in 2020, coinciding with 75 years of diplomatic relations between India and China.

 

However, tourism between the two Asian giants has taken a significant hit. About 157,000 Indians visited China in 2023, a third of the figures in 2019. Similarly, while there were about 340,000 arrivals from China to India in 2019, about 31,000 did so in 2023. Just about 1.4 percent of these were holiday makers. About 34 percent of these were business arrivals and another 27 percent were members of the Indian diaspora visiting home.

 

Of the Indians who travelled to China in 2023, 46 percent travelled for holiday or recreation. In comparison, a larger proportion of Indians travelling to other Asian countries, Indonesia, Thailand and Vietnam, for instance, do so for a holiday.

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