Modi says border peace underpins India-China ties

Indian Prime Minister Narendra Modi said stable conditions along the border are a prerequisite for stronger relations with China, as New Delhi and Beijing continue a cautious thaw after years of tension. He made the remarks during a bilateral meeting with Chinese President Xi Jinping on the sidelines of the BRICS summit.

Border tensions remain central

The two leaders discussed the long-running border dispute as well as the trade gap that heavily favors China. India said both sides committed to seeking a fair, reasonable and mutually acceptable settlement of border issues, while also taking a strategic and long-term view of ties rather than allowing disputes to dominate the relationship.

Relations between the two Asian neighbors had worsened sharply after a deadly clash in 2020, but have improved gradually over the past year. Xi’s visit to India for the summit marked his first trip to the country in seven years, underscoring the current effort to manage the bilateral relationship more carefully.

Trade gap adds to the strains

Economic ties remain deep even as political distrust lingers. China is India’s largest trading partner, and total bilateral trade reached a record $151.1 billion in the year ended March 2026, according to the figures cited by India.

That commercial relationship has also widened India’s dependence on Chinese exports. New Delhi’s trade deficit with Beijing rose to a record $112.16 billion from $99.21 billion, highlighting a persistent imbalance that has been a source of friction alongside the border dispute.

The border issue has shadowed relations for decades and goes back to the two countries’ war in 1962. Last month, their officials held the 25th round of border talks and said they reached eight points of outcome and consensus aimed at easing long-running disagreements.

For markets, the latest diplomatic language suggests both governments want to keep tensions contained while preserving trade links. The meeting did not eliminate the structural problems between the two countries, but it reinforced that border stability and economic engagement are now being treated as linked parts of the same relationship.

This article is not investment advice and recommends no asset, level or direction; a single session's move is not evidence of a trend. For background see Stocks, Bear Market, BIST 100, and for terms the finance glossary.