Speaking on the margins of the International Monetary Fund gathering in Bangkok, Finance Minister Nirmala Sitharaman pointed to a widening gap in trade flows between India and China, attributing the imbalance in part to regulatory hurdles — including phytosanitary rules governing plant health — that she said have limited the entry of Indian goods into the Chinese market, with non-tariff measures of that kind described by her as the foremost obstacle standing between the two countries' commercial relationship.

Raising the issue of trade restrictions, she pointed to categories of Indian exports — among them generic pharmaceuticals, beef, and vegetables — that she argued hold considerable commercial promise in the Chinese market yet face barriers to entry there.

A lethal confrontation along the shared border in 2020 set off a prolonged period of strained relations between India and China, with curbs placed on Chinese investment flows and commercial activity in the years that followed. Ties between the two countries have warmed over that period, with both governments working to dial down friction along their shared border and reopen channels of communication at the highest levels. Efforts to put the bilateral relationship between Modi and Xi on a more stable footing have been revived in recent months.

Bilateral trade data show the gap between what India imports from China and what it exports back has now surpassed the $100 billion mark in the current calendar year. Sitharaman noted that no non-tariff barriers or countervailing duties had been deployed by India in response.

Sitharaman's remarks followed a statement earlier in the week from External Affairs Minister S. Jaishankar, who told reporters that India faces unequal conditions when doing business in China. She went on to raise concerns about trade pacts with Southeast Asian countries, noting that the terms of those agreements place India at a disadvantage. India's commitment to its trade arrangement with the ASEAN bloc would remain intact, she noted, though the underlying terms were expected to undergo renegotiation.

Among the world's largest economies, India has held onto its position as the top performer in growth terms, with household spending and capital investment providing the underlying lift. Heavy reliance on imported crude oil and fertilisers stood out in Sitharaman's remarks as a point of exposure for the national economy.

Import costs of that kind have been climbing, she told reporters, with the country's foreign exchange reserves absorbing the added strain. Rising oil prices have added to India's import bill, while a retreat by foreign portfolio investors — drawn away by the appeal of higher American bond returns — has kept demand for dollars elevated at the rupee's expense over the course of the year.

To shore up the rupee's exchange rate, the Reserve Bank of India has been offloading dollar reserves while rolling out a set of policy tools — among them a dedicated facility channelling foreign currency to state-run oil firms and tightened restrictions on derivative contracts. Central bank steps lifted the rupee away from record-low territory, though the underlying pressures on the currency remain in place.