Success of BRICS Summit Hinges on India-China Reset

The summit meeting of the leaders of BRICS countries in New Delhi this weekend will be judged less by rhetoric, more by actionable outcomes on key issues involving trade facilitation, supply chain resilience, and development finance. The agenda is expansive; for a grouping like this with rival security alignments, divergent economic models and unequal capacities, convergence of views and consensus-building are a real challenge.

At the core sits the intra-BRICS trade imbalance, most pronounced in the case of China and India. Restoring trade balance is a precursor to any meaningful progress on proposals to push local-currency trade or increase development finance flows among member nations. Similarly, there is divergence in views on capital controls, sanctions exposure, data rules, and cyber security standards. There is also a lack of trust in one another’s financial infrastructure.

The political backdrop to the summit isn’t less demanding either. The escalating conflict in West Asia, the festering Russia-Ukraine war, and the strategic mistrust between India and China will constrain the summit’s collective language.

Negotiators and summit facilitators from member nations are, therefore, apparently looking at a realistic outcome where divergences remain but areas of possible cooperation are isolated. That is why officials from both India and China have held a series of meetings to iron out political differences impeding economic cooperation.

Following the Shanghai Cooperation Organisation meeting in Kyrgyzstan earlier this month, Prime Minister Narendra Modi and Chinese President Xi Jinping would be meeting for a second time in less than two weeks to take the conversation forward. Their bilateral meeting, to be held Saturday evening on the sidelines of the summit, therefore, holds the key to the outcomes one can expect from the summit.

India’s Stakes
India’s most important concern is trade balance. BRICS is an important source of energy, commodities, machinery, and industrial inputs, but it doesn’t yet absorb a comparable volume of Indian exports. As an earlier article published here pointed out, BRICS supplies 42% of India’s imports but buys only 22% of Indian exports. The table below illustrates how this imbalance has worsened over the years.

Over the past five years, India’s trade with BRICS more than doubled from $203 billion in 2020-21 to $418 billion in 2025-26, mostly on the back of a surge in imports from China alongside oil purchases from Russia. Exports from India, however, grew much slower. As a result, the trade deficit between India and BRICS countries tripled during this period, from $75 billion to $226 billion.

To undo some of this asymmetry, therefore, New Delhi needs better market access, especially in China, Russia and Indonesia, fewer non-tariff barriers, and opportunities for pharmaceuticals, digital services, engineering goods and higher-value manufacturing. There are no easy answers to reducing its dependence on imports from China, which has come to be deeply structural. More than finished products, it’s the dependence on capital goods and intermediates that is driving the import surge. India’s factories need them to keep going.

A joint research report by New Delhi-based consulting firm Koan Advisory Services and the Institute of Chinese Studies released this week bears this out. Studying trade flows between the two countries at a granular level, the report finds that the dependence on intermediates and capital goods has significantly deepened in recent years. Imports of electrical equipment, electronics, and semiconductors under what is classified as HS Chapter 85 totalled $46 billion, accounting for a third of the trade deficit with China, the report said.

Combined with capital machinery and other equipment, roughly $70 billion or more than half of the trade gap, came from two categories – Chapter 84 and Chapter 85, whereas Indian exports to China remain largely restricted to low-value extractive materials and minerals.

Paradoxically, this import surge stems partly from India’s domestic manufacturing growth. For instance, under the Production-Linked Incentive scheme, as global tech giants like Apple shifted 20% to 25% of iPhone production to India, local assembly facilities required massive imports of Chinese intermediate components.

In other words, mere restrictions on imports or incentivising domestic production won’t help solve the problem. Instead, the two sides will have to figure out a way that helps localising production, while protecting their respective national interests and sensitivities. The Modi-Xi meet will be watched for this.

The other stake India has is strategic. India wants to remain a bridge between the Global South and advanced economies. While it engages China, deepens ties with Russia and emerging markets, it would still like to strengthen its partnerships with the United States, Europe, Japan and Australia, which is why New Delhi would like to push back any attempt by China or Russia to frame the summit as a geopolitical counter bloc to the western nations.

India also has a stake in how talks on local-currency trade go. It would like to advocate interoperability among central bank digital currencies and national payment systems so that bilateral transactions can be settled quickly and be cost-effective. This is different from de-dollarisation or constructing a single bloc-wide monetary system. Still, the obstacles are formidable. Local currency settlement works best when trade is reasonably balanced. At present, it isn’t. Hence, the summit may end with a statement of intent rather than action.

That said, the BRICS summit does offer another opportunity for India and China to move the needle on their relationship, even though a strategic reset may still be a long shot. Also, BRICS provides neutral ground for cooperation in development finance, energy security, AI standards and multilateral reforms.

Rebuilding Trust
A substantive bilateral meeting between Modi and Xi would confirm that the relationship has moved beyond the diplomatic freeze over the past five years. Recent border talks have created additional military hotlines, meeting points and mechanisms for delimiting less contentious sections. The border dispute remains unresolved, though. Disengagement is not the same as de-escalation or a mutually accepted boundary. Strategic mistrust also extends to China’s relationship with Pakistan, critical technologies, data security and India’s partnerships in the Indo-Pacific.

Lately, however, economic incentives appear to be having a sobering effect on political differences. Resuming a structured economic dialogue should therefore be a priority at the bilateral meeting of the two leaders. As a precursor to such a dialogue, some confidence-building measures must be agreed upon. These could include easier visas, direct flights, business travel and reciprocal movement on investment and market access.

In sum, the success of the 18^th Summit of BRICS leaders depends on the ability and willingness of Modi and Xi to rebuild and restore trust between the Asian neighbours.