August 14, 2025

Get ready for a spicy twist in India-China relations! The two giants are likely to start talks soon on a big trade package covering crucial rare earth magnets, fertilisers, and pharmaceuticals. This move could signal a fresh thaw in ties just as global trade tensions heat up. Well-informed sources say the discussions are expected around the time Prime Minister Narendra Modi heads to the Shanghai Cooperation Organisation (SCO) summit in Tianjin from August 31 to September 1. A senior official revealed, “The top three items on the agenda for discussion are rare earth magnets, fertilisers and pharmaceuticals.” Why are these special? Rare earth magnets power many products, especially electric vehicles—which are booming everywhere! Yet, India has not got clearances from China to supply these magnets or fertilisers yet. India usually requires government approval for investments from neighboring countries due to past border skirmishes and China's backing of Pakistan—so things stay a little tense. Plus, China has put export controls on medium and heavy rare earth items since April, citing “safeguarding national security” after US tariffs on Chinese goods. Meanwhile, the US slapped a heavy 50% tariff on Indian exports, while China has paused shipments of urea and other fertilisers to India for months. But here’s the exciting bit—China is slowly easing restrictions and tenders to import urea from China have been launched by Indian state trading companies. This shows some green light for fertiliser supply is flickering on. The story isn’t over for specialty fertilisers like calcium nitrate and mono ammonium phosphate. India imports about 80% of these from China, but shipments have stopped recently. While no formal talks are out yet, people close to the matter sense discussions might begin soon. On the pharma front, both India and China worry about a looming trade imbalance. US President Trump plans to slap tariffs up to 250% on finished drugs within the next one and a half years, threatening both countries' industries. India’s commerce ministry is arranging meetings with pharma leaders before the SCO summit to explore collaboration and ways to beat these challenges. A pharma expert told ET, “While pharmaceutical exports from India have been thus far exempt from the 50% US tariffs, future risks cannot be ruled out.” With Modi’s visit to the SCO summit on the horizon, these talks could open a new chapter, turning the chilly winds between India and China into promising spring breezes. Will the neighbours turn competition into cooperation? Stay tuned!

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Tags: India-china relations, Rare earth magnets, Fertilisers, Pharmaceuticals, Sco summit, Trade talks,