A few days before the India-US trade deal, a trade agreement was reached between India and the EU. Meanwhile, reports have emerged that India's trade with China has also reached record levels. 

What will happen if FTA is done with China?

On January 27th, just days before the India-US trade deal, a trade agreement was signed between India and the European Union (EU). This deal was called the "Mother of All Deals." The subsequent deal with the United States is being called the "Father of All Deals." Meanwhile, reports have emerged that India's trade with its neighbor and the world's second-largest economy, China, has reached record levels. 

Following India's deals with Europe and the United States, it's now being questioned what would happen if a similar deal were struck with China. Both deals favor India's trade, as India exports more than it imports to both the United States and the European Union. This has led these countries to prioritize trade deals with India. They were forced to enter into a deal with India. 

The India-China trade balance

differs from that of the US and Europe, as China imports significantly more and exports much less. In fact, Chinese Ambassador to India Xu Feihong announced on Tuesday at an event celebrating the Chinese New Year that trade between the two countries had reached US$155.6 billion, a 12 percent increase over the previous year. The ambassador stated that this increase in trade is a clear sign of improving India-China relations. 

Chinese Ambassador Xu Feihong stated that exports from India to China have increased by 9.7 percent. The Kailash Mansarovar Yatra has resumed, with approximately 20,000 Indian pilgrims participating. China has resumed issuing tourist visas for Indian citizens. Furthermore, direct flights between the two countries have also resumed, increasing people-to-people exchanges.

Chinese Ambassador

Xu Feihong stated that the successful meeting between President Xi Jinping and Prime Minister Narendra Modi in Tianjin in August 2025 marked a reset and fresh start for India-China relations. He emphasized that the two countries are mutually supportive. Furthermore, the Chinese Ambassador expressed support for India's BRICS presidency this year and stated that China is ready to strengthen multilateral coordination and promote the development of the Global South through BRICS.

Despite record growth in India-China trade, some concerns remain on the Indian side due to the imbalance in bilateral trade. China's exports significantly exceed India's. The Indian side has expressed concern over the lack of adequate access to Chinese markets, particularly export restrictions in key sectors such as fertilizers, rare earths, and tunnel boring machinery.

India's trade deficit:

According to some reports, India's trade deficit could reach a record high of $116 billion in 2025. The Chinese ambassador stated that China aspires to become not only the world's factory but also the world's market. China's tariff level is low by international standards (7.3%), the negative list for foreign investment is being shortened, and the visa-free policy is being expanded.