India may allow further imports from China as a countermeasure to imminent tariffs from the US

India is looking to step up trade with China as a countermeasure to imminent tariffs from the US, according to a report by the Indian Express. US President Donald Trump has placed tit-for-tat tariffs on all products from the South Asian nation, set to begin April 2.

The report, citing sources, said India is considering revising its trade and investment policies and wants to relax some of the restrictions with China that were introduced in response to border clashes in 2020. Relations between the two countries have been strained since the clashes, in which soldiers from both sides were killed.

Following multiple rounds of military and diplomatic talks in October last year, New Delhi and Beijing announced an agreement on disengagement from the friction points and agreed to work on normalizing ties. Following this, certain proposals to ease trade and investment restrictions between India and China have gained momentum, driven by industry demands.

The proposals include relaxing visa restrictions for Chinese nationals, reducing tariffs and non-tariff barriers on certain imports, and potentially allowing Chinese apps such as TikTok to operate again.

Plans are also already underway to resume flights between the two countries, issue visas to Chinese scholars, and revoke total bans and restrictions on consignments from China at Indian ports, according to sources quoted by the Indian Express.

In January this year, Chinese Foreign Minister Wang Yi called for the two countries to enhance trust and understanding and work to implement last year's decision on deescalating border tensions.

According to sources quoted in the report, there is growing sentiment in India that engaging in closer dialogue with China to normalize business relations could potentially act as a hedge against the US. Recently, the Indian Finance Ministry is said to have made a presentation in support of easing some of the restrictions earlier in the fiscal year.

"Since we're anyway being forced to bring down tariffs (to accommodate the Trump administration), it only makes eventual sense to ease up tariff and non tariff barriers, especially on inputs and products not manufactured in India at scale," a source was quoted as saying in the report. The talks have been ongoing for some time and the relaxations may be announced in the coming weeks, the source added.

The removal of trade and non-trade barriers is a demand from small and medium enterprises. In February, Chinese fashion giant Shein returned to India via a partnership with Reliance Industries.

Bilateral trade between India and China in the fiscal year ending March 2024 stood at $118.40 billion. According to the latest data from the Global Trade Research Initiative, China once again became India's top trading partner in fiscal year 2023-24, surpassing the US.