India–China Trade Ties: Boon or Bane for India’s Personal Care

9/13/2025 11:42:00 AM   KanWhizz Team   

In the dynamic world of international trade, the relationship between India-China is among the most influential. Together, these two nations account for over a third of the world’s population and maintain a complex web of economic exchanges. While their trade spans a wide range of sectors, one industry where the impact is particularly noticeable is personal care. From skincare and cosmetics to hygiene products, India-China trade connections shape how the Indian personal care market grows and evolves. But the big question remains—are these ties a boon or a bane?

India-China trade relations in 2025 and the impact of the SCO Summit on the US

India-China trade relations in 2025 are marked by attempts to normalize ties and address the substantial trade deficit faced by India, according to India Briefing. The recent Shanghai Cooperation Organization (SCO) Summit in Tianjin, China, held from August 31 to September 1, 2025, served as a significant platform for these discussions. 

Key developments in India-China trade relations

• Trade Normalization Efforts: Both countries have agreed to resume direct flights, reopen border trade routes, encourage investment flows, and establish new border-related mechanisms, signaling a willingness to rebuild ties after years of strained relations.

• Addressing the Trade Deficit: India's trade deficit with China reached $99.2 billion in 2024-25, highlighting the need for strategic reforms to reduce dependency on Chinese imports.

• Focus on Diversification: India is exploring strategies to diversify its supply chains and reduce reliance on any single country, including China, for key goods and technology. The upcoming Union Budget 2025 is expected to include measures to support this, such as expanding the Production-Linked Incentive (PLI) scheme to more sectors.

• Technological Cooperation: China has reportedly agreed to address India's concerns over export curbs on critical commodities like fertilizers, rare earth magnets, minerals, and tunnel boring machines, following high-level discussions in July 2025. This move is seen as part of broader efforts to improve bilateral ties and reflect a mutual interest in regional stability. 

Impact of the SCO Summit on the US

The SCO Summit, which brought together leaders from Russia, India, China, and other member nations, has been interpreted by some as a challenge to US dominance in global trade and regional conflicts. The summit highlighted the potential for a new multipolar world order, where countries are seeking alternative partnership models and reducing reliance on US-dominated systems. 

Potential implications for US trade policies

• Changing commerce Dynamics: The SCO's collaboration between China, India, and Russia, especially in areas like energy, infrastructure, and payments, points to a possible change in the way that commerce flows across the world. This could impact US trade with these countries and necessitate a re-evaluation of its trade policies.

• Reduced Leverage: As China continues to diversify its trade relations and explore new markets, US leverage through tariffs and trade pressure may diminish.

• Challenges to US-led Global Governance: China's push for a "more just and balanced international governance framework" at the SCO Summit suggests a desire to reshape the global order and potentially challenge the US's role in international affairs.

• India's Strategic Autonomy: India's participation in the SCO demonstrates its commitment to strategic autonomy and its willingness to engage with both the US and other global powers while pursuing its national interests, according to Vision IAS. 

However, despite the warming India-China ties, significant differences remain between India and the US on various issues, including trade, tariffs, and energy transactions with Russia. The US views India as a "quasi-ally" and expects it to align closely with the American position, while India emphasizes its status as a "global power" and asserts its independent foreign policy. 

Why India-China Trade Acts as a Boon for Personal Care

1. Affordable Inputs: China’s large-scale production of chemicals and cosmetic ingredients keeps costs low. Through India-China trade, Indian businesses can offer competitively priced products to consumers.
2. Advanced Packaging and Design: Chinese suppliers bring innovation in packaging formats and formulations. This enables Indian companies to adopt global trends without significant R&D spending.
3. Market Entry for Startups: For new businesses, sourcing from China via India-China trade reduces entry barriers. Ready-made components and formulations help small firms scale up quickly.
4. Growth of Private Labels: Indian retailers and online platforms increasingly sell private-label personal care products, many of which are contract-manufactured in China. This boosts affordability for consumers.

The Downsides of India-China Trade

Despite its benefits, India-China trade comes with challenges that may threaten the long-term strength of India’s personal care ecosystem.

1. Excessive Dependence: Relying heavily on Chinese imports leaves Indian companies exposed to supply chain disruptions. The pandemic and geopolitical frictions revealed this vulnerability.
2. Concerns Over Quality: Some Chinese suppliers have faced criticism for inconsistent standards. Within India-China trade, this becomes a major concern since consumer trust is crucial in personal care.
3. Hindrance to Local Growth: Cheap imports discourage domestic investment in raw material and packaging production. This slows India’s ability to develop its own supply chain.
4. Widening Trade Deficit: India already runs a trade deficit with China, and reliance on India-China trade in personal care widens the gap further.

The Consumer Viewpoint on India-China Trade

For consumers, India-China trade offers affordability and access to a variety of global-quality products. Packaging innovations and trendy formulations reach Indian shelves faster because of Chinese imports.

However, growing awareness around safety and sustainability means some consumers are cautious about Chinese imports. Concerns over product transparency and quality can influence purchasing decisions, particularly in urban and premium segments.

India’s Self-Reliance Push Amid India-China Dynamics

To address overdependence, India has been driving the “Atmanirbhar Bharat” initiative. In the context of India-China trade, this means encouraging local production of ingredients, packaging, and R&D capabilities.

Domestic firms are now investing in plants for natural extracts, surfactants, and packaging. Government incentives such as production-linked schemes are supporting these efforts. Reducing reliance on India-China trade while strengthening local ecosystems could make India’s personal care industry more resilient.

Opportunities for Collaboration in India-China Trade

Even with its challenges, India-China cooperation has potential benefits:

• Joint Ventures: Partnerships between Indian firms and Chinese manufacturers could allow technology sharing while maintaining stricter quality standards.
• Skill Building: Leveraging India-China expertise in packaging and formulation can enhance Indian manufacturing.
• Regional Integration: Stronger Asian supply chains can make both Indian and Chinese companies globally competitive.

Innovation Beyond India-China Trade

The Indian personal care sector is witnessing a strong shift toward herbal, Ayurvedic, and eco-friendly products. This is where India has an edge. By focusing on plant-based formulations and sustainable packaging, Indian companies can reduce dependence on India-China imports.

Both startups and established brands are tapping into this growing demand. By blending tradition with modern science, India can carve out a unique identity in the personal care industry.

Looking Forward: Boon or Bane?

So, is India-China trade a boon or bane for the personal care sector? The reality lies in a balanced perspective. In the short term, the trade relationship is a boon—offering affordable raw materials, variety, and innovation. Over the long term, however, excessive dependence could become a bane, leaving India exposed to risks.

The ideal strategy is to use India-China trade as a stepping stone while steadily building domestic capacity. By focusing on sustainability, innovation, and local supply chains, India can strike the right balance.

Conclusion

In conclusion, India-China trade relations in 2025 are undergoing a period of recalibration and cautious optimism. The SCO Summit 2025 has provided a platform for these discussions and has highlighted a potential shift in global trade dynamics that could have significant implications for US trade policies and global influence.