India Should Adopt Balanced Approach To Trade With China: Jaishankar

New Delhi: India must adopt a balanced approach in its business dealings with China, considering both the troubled political relationship over the past few years and the need to avoid over-reliance on a single supply chain, said External Affairs Minister S. Jaishankar at an event organized by the Associated Chambers of Commerce & Industry of India (Assocham) on Thursday.

Jaishankar acknowledged the recent progress made with China in addressing some of the “friction points” along the Line of Actual Control (LAC), but emphasized that further discussions are necessary to resolve remaining issues. “Nobody is saying don’t do business [with China],” Jaishankar remarked. “But we are equally saying, think about it, weigh it, and look at the bigger-term implications, especially for MSMEs (Micro, Small, and Medium Enterprises). We don’t want to become just a market for another economy while struggling to compete with their products dumped in our country.”

China’s dominant role in global manufacturing—accounting for nearly a third of production worldwide—places it at the heart of many global supply chains. Jaishankar cautioned India against becoming too dependent on Chinese supply chains, warning that it could result in sectors being “hollowed out” and leave India vulnerable to external economic forces.

Highlighting the troubled political relationship between India and China over the past four years, Jaishankar stressed that while things had improved somewhat following recent disengagements at Demchok and Depsang, there was still a need for deeper dialogue. “For the last four-and-a-half years, our political relationship with China has been difficult... because of the situation at the border,” Jaishankar said. “We’ve managed some progress, but we need to continue discussions with China on what comes next.”

The military standoff at the LAC, which began in 2020, had severely strained bilateral ties. After intense negotiations, both nations reached an understanding on disengagement at key points in October, and leaders from both sides agreed to revive diplomatic mechanisms to address the ongoing border dispute.

Strategic Ties with the U.S. and Russia

During his address, Jaishankar also spoke about India’s evolving relationships with other global powers, notably the United States and Russia. He noted that India is in a “much more advantageous position” than many other countries to build deeper ties with the incoming Donald Trump administration. Jaishankar emphasized that India had long enjoyed a positive political relationship with Trump, and that this rapport could be leveraged to strengthen bilateral ties further.

“Like everybody else, we may also have some issues... but we are not looking at Trump 2.0 as a political challenge. We are in a much more advantageous position to translate it into a deeper relationship,” he said, referring to the upcoming U.S. administration. Jaishankar also hinted that the new U.S. leadership might focus on “immediate outcomes and results,” which could align with India’s interests, particularly in trade and defense cooperation.

On the growing India-Russia trade relationship, Jaishankar noted that while it had surged to $66 billion in 2023-24—largely due to discounted Russian crude—India had concerns over the trade imbalance, with its exports to Russia being much smaller in comparison. The two countries have set a bilateral trade target of $100 billion by 2030, but Jaishankar called for Russia to open up more sectors to Indian exports, particularly in pharmaceuticals, marine products, and agriculture.

“We need access to natural resources on a long-term and sustainable basis,” Jaishankar said, highlighting countries like Russia, Australia, Indonesia, and Brazil as India’s natural partners in this regard. However, he pointed out challenges in accessing the Russian market due to non-tariff barriers, such as sanitary and phytosanitary restrictions.

“We are pressing them in the pharma industry, marine products, and some agro-products,” Jaishankar explained. “These are standard tactics to keep other countries out, but we will find ways to work through them.”