About one-fifth of India’s trade is currently conducted in East Asia.

China and ten countries of Southeast Asia (ASEAN) account for most of those trade transactions.

And that’s where India should concentrate efforts to integrate its economy with the fastest growing part of global demand and output. That would also strengthen India’s quest for leadership positions in the Global South community.

To unlock that enormous potential, India should start with a thorough review of its trade policies. An increasing integration with Easi Asian flows of commerce and finance will most certainly require a greater degree of free trade than is currently the case.

Such a review of India’s ASEAN trade has been announced some time ago. That process should continue. Consultations with Singapore (an ASEAN member country) show that there is room for substantial improvements of regulatory frameworks to support economic development. As a result, with a bilateral trade of $34.26 billion last year Singapore has become India’s largest ASEAN trade partner.

India’s pivot to East Asia

Similar trade reviews with Indonesia, Malaysia, Thailand and Vietnam could also expand business transactions. Those countries, and Singapore, now account for 90% of India’s $100 billion annual trade with Southeast Asia.

China, of course, is India’s largest Asian trade partner and second only to the U.S. on a global level.

A significant realignment of U.S.-India trade relations will probably change that. Such a turn of events would be quite unfortunate because the U.S. trade with India in the first half of this year was still running at an annual rate of $156.8 billion – a 29.2% increase from the same period of 2024.

By contrast, the Sino-Indian ties are now unfolding along an economic and geopolitical path set forth during the countries’ summit at the time of BRICS meeting in Kazan, Russia, on October 22-24, 2024. The next summit is expected when the SCO (Shanghai Cooperation Organization) leaders meet from August 31 to September 1, 2025, in Tianjin, China.

The Sino-Indian discussions in Tianjin have been well prepared by a thorough review earlier this week of economic and security issues focusing on unresolved questions of the countries’ 3,488 km border. China and India fought a major border war in 1962, followed by four skirmishes, the last one taking place five years ago.

Apparently determined to put an end to such hostilities, Beijing and Delhi reached a consensus on August 20, 2025, that should guide an expert group’s work on border demarcations.

Dragon and elephant paso doble

The most important part of that statement indicates that border questions will be considered “from the political perspective of the overall bilateral relationship,” and “in accordance with the political guiding principles agreed by the two countries in 2005.”

So, having tried violence and deep-seated hostilities, it is possible the wisdom could prevail. Indeed, the dragon and the elephant (two animals emblematic of China and India) could well decide to dance together, as recently suggested by China’s President Xi Jinping.

That would be a beautiful coda to a dialogue initiated as early as October 1954 between India’s Prime Minister Jawaharlal Nehru and Chairman Mao Zedong, followed by China’s Premier Zhou Enlai visit to India in April 1960 to discuss border problems.

Trade should serve as an instrument to better understanding and confidence building to facilitate difficult negotiations on thousands of kilometers of demarcation lines.

China begins that journey with an absolute advantage and India’s reliance on Chinese suppliers.

During India’s last fiscal year (April 1, 2024 to March 31, 2025), Delhi bought $113.5 billion of Chinese merchandise, while, over the same interval, Beijing imported a paltry $14.3 billion of Indian goods. That left India with a whopping $99.2 billion bilateral trade deficit.

And the same story continues. According to Chinese foreign trade statistics for the first seven months of this year, exports to India amounted to $77.4 billion, an increase of 13.4% from the year earlier. During the same period, Chinese purchases of Indian goods came in at $10.7 billion (a decline of 7.1% from the same period of 2024), leaving India with a trade deficit of $66.7 billion.

Those large, and growing, trade imbalances favoring China are unsustainable. Their structural nature appears obvious. They, therefore, require adjustments of India’s economic policies, but they also indicate the need for China to review its own supply networks.

Next week’s Sino-Indian summit in Tianjin should give an impulse for bilateral consultations to establish more balanced trade relations and a stable strategic partnership.