Modi, Xi Pledge to Tackle Record Trade Deficit and Supply Chain Vulnerabilities at BRICS Summit

Indian Prime Minister Narendra Modi and Chinese President Xi Jinping have agreed to tackle the escalating trade imbalance and pressing supply chain vulnerabilities between their two nations. Meeting on the sidelines of the BRICS Summit 2026 in New Delhi, the leaders directly addressed India's soaring trade deficit with China, which hit a record $112.16 billion in 2025-26. This high-level commitment signals a critical moment for economic ties amidst ongoing geopolitical complexities. India's reliance on China for essential industrial inputs and critical minerals has created a 'structural trade imbalance,' making its key sectors vulnerable to disruptions. The Global Trade Research Initiative (GTRI) reports that about 66% of India's imports from China are in vital areas like electronics, machinery, and organic chemicals, which are crucial for domestic manufacturing. Moreover, India depends on China for over 40% of six key critical minerals, vital for its renewable energy, electric vehicle (EV), and defense industries. Looking ahead, both nations face significant challenges in translating this agreement into tangible action. While India seeks more predictable market access and aims to diversify its supply chains, China is pushing for easier investment rules in the fast-growing Indian market. The discussions will likely focus on how India can reduce its heavy reliance on Chinese industrial components and critical minerals, while Beijing navigates its economic interests with the desire for stable bilateral relations.