India has signaled openness to Chinese intermediate goods to support local manufacturing, with trade hitting $91.76 billion between April and September 2026. While this aims to meet domestic demand, investors face uncertainty regarding China's export controls on critical machinery. These restrictions could delay major infrastructure projects, making supply chain and project timelines the key metrics to monitor for construction and manufacturing companies.
India is adjusting its trade policy with China, signaling an openness to importing essential raw materials and intermediate goods to support its manufacturing sector. Commerce Minister Piyush Goyal confirmed this approach, aimed at meeting domestic demand while the government keeps a firm check on unfair trade practices. This shift follows recent diplomatic discussions between the two nations, marking a change from the restricted engagement that followed the 2020 border standoff.
Trade data highlights the intensity of the economic relationship. For the period between April and September 2026, bilateral trade climbed to $91.76 billion, a 29% increase compared to the same period last year. With this growth, China remains India’s largest trading partner. However, this volume comes with a significant trade deficit, which hit $99.19 billion for the 2025–26 fiscal year. For investors, the challenge is that India’s manufacturing reliance on Chinese intermediate components remains high, despite the government’s push to balance trade by boosting exports to the ASEAN region and China.
A specific risk has emerged regarding infrastructure projects. China has implemented export controls on critical machinery, including tunnel boring machines essential for high-speed rail and urban metro development. These restrictions create a supply chain bottleneck that could lead to project delays or increased costs for Indian infrastructure companies. The government is currently assessing the impact of these controls and negotiating to minimize disruption.
The Commerce Ministry maintains that it will continue to use legal frameworks to protect domestic industries from predatory pricing. As India navigates this diplomatic and economic balance, the key monitorables for investors include the stability of raw material supplies for manufacturing, potential delays in major infrastructure commissioning, and any changes in import duty structures. Market observers will also track how effectively the government can manage these supply chain risks while maintaining its infrastructure expansion pace.