Elephant in the room in meetings with Xi Jinping, Vladimir Putin: India’s manufacturing challenges

As BRICS leaders convene in Delhi, the primary focus is on the global order and escalating conflicts, but a key facet will be the economic relationship between the nations. Notably, Indian Prime Minister Narendra Modi is set to meet Presidents Vladimir Putin of Russia and Xi Jinping of China. In recent bilateral meetings, the leaders have aimed to achieve a more balanced economic partnership.

Modi and Putin are scheduled to meet on Friday, alongside a visit to the India-Russia International Industrial Trade Fair in Delhi. The importance lies in balancing the economic relationship. However, India's exports to Russia are below $5 billion, while imports from Russia total $63.8 billion in 2024-25, resulting in a trade deficit of nearly $59 billion.

The deficit is not solely due to the volume; it is also due to the limited range of Indian exports. Russia is a significant market for Indian manufactured goods, while China, the world's manufacturing leader, exported around $103 billion of goods to Russia in 2025. Yet, India lacks comparable products to offer. This manufacturing gap is evident in trade with China, where the trade deficit is approximately $112 billion.

The asymmetry is such that Russia primarily sells India natural resources, whereas China supplies manufactured goods and advanced industrial equipment. India has come to accept this reality, responding to China's requests to remove trade restrictions. However, progress might be limited, as Indian businesses desire access to Chinese manufactured goods, despite India's desire to reduce dependence on the country.

The common challenge is India's weak manufacturing base, evident in its inability to export to Russia and its over-reliance on China's imports. This situation echoes India's historical calls for a more democratized global economic order. The immediate economic goal is to persuade Russia and China to buy more from India, invest in the country, and strengthen India's industrial capacity.

However, diplomacy alone seems insufficient to bridge the gap; India needs industrial reform, simpler regulations, enhanced competitiveness, reduced corruption, improved domestic supply chains, and a stronger manufacturing ecosystem. While diplomacy can create opportunities for Indian industry, it cannot supply products that India does not yet produce competitively.

Ultimately, Delhi's real challenge is not about altering the global economic order but improving its internal structures. The success of India's economic diplomacy will depend more on its ability to produce efficiently than on convincing other nations to engage.