After years of frosty ties marked by border clashes and trade restrictions, India and China are moving cautiously toward rapprochement. A series of economic and diplomatic gestures over the past month suggests that New Delhi and Beijing may be laying the groundwork for a more pragmatic partnership—driven in part by shared pressures from Washington.
First Diesel Shipment to China in Four Years
In a notable move, Nayara Energy, partly owned by Russian oil giant Rosneft, has shipped diesel to China for the first time since April 2021. The 496,000-barrel cargo of ultra-low sulfur diesel departed Nayara’s Vadinar refinery in Gujarat on July 18, originally bound for Malaysia. But after the European Union blacklisted Nayara in its 18th package of sanctions, the tanker EM Zenith made a U-turn in the Strait of Malacca, anchored for 12 days, and then changed course for Zhoushan, China.
The diversion underscores both the shifting trade patterns caused by EU and US sanctions on Russian oil and the growing willingness of India and China to explore commercial opportunities despite lingering political tensions. Nayara, facing difficulties securing crude and payments under the new sanctions regime, has sought advance payments and letters of credit before loading shipments.
China Lifts Urea Export Curbs to India
Beijing has also relaxed restrictions on urea exports to India—one of the world’s largest buyers of the nitrogen-based fertilizer—allowing the potential purchase of up to 300,000 tons. China had maintained export limits on India even after easing domestic restrictions in June this year, a policy shift that slashed India’s urea imports from China from $774 million in FY 2023–24 to just $42.8 million in FY 2024–25.
For India’s millions of farmers, the resumption of Chinese urea supplies could help stabilize prices and availability ahead of the next cropping season.
Direct Flights Set to Resume
In another step toward normalization, both countries are preparing to resume direct passenger flights, suspended since the COVID-19 pandemic and the deadly 2020 Galwan Valley clash. The announcement is expected during Prime Minister Narendra Modi’s upcoming visit to Tianjin for the Shanghai Cooperation Organisation (SCO) summit on August 31–September 1, his first trip to China in seven years.
The SCO gathering will also offer Modi and President Xi Jinping a platform for bilateral talks, following their October 2024 meeting in Kazan on the sidelines of the BRICS summit.
Shared Pressures from Washington
The renewed India-China engagement comes amid a turbulent global trade environment. US President Donald Trump recently doubled tariffs on Indian goods to 50%, citing New Delhi’s continued purchases of Russian oil. Washington has also maintained high tariffs on Chinese exports since the trade war began in 2018.
With both Asian giants under economic pressure from the US, analysts suggest they may see value in closer coordination—both to diversify trade partnerships and to present a united front as major players in the Global South. Henry Wang, president of the Center for China and Globalization in Beijing, told Bloomberg the relationship is entering “an up cycle,” emphasizing that “as leaders of the Global South, they have to speak to each other.”
From Border Clashes to Cautious Diplomacy
Relations between the two countries had been at a standstill since the 2020 Galwan incident, which derailed diplomatic and economic cooperation. But a disengagement agreement in October 2024 paved the way for renewed high-level exchanges.
Since December 2024, the two sides have restored cultural exchanges such as the Kailash Mansarovar yatra, eased visa issuance, and held a series of security and foreign affairs consultations.
While deep mistrust remains, the recent moves suggest a pragmatic turn in India-China ties—one shaped by geopolitical realities, trade necessity, and the shared goal of strategic autonomy.
Whether this thaw will endure beyond tactical cooperation remains an open question, but for now, diesel tankers, urea shipments, and soon, passenger flights, are charting a warmer course between New Delhi and Beijing.
