Indian Prime Minister Narendra Modi on Saturday said that “peace and tranquility” in the border areas is essential for developing bilateral relations with its neighbor China.

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Ties between the two countries, which had deteriorated sharply following a deadly border skirmish in 2020, have been thawing for more than a year and have led to Chinese President Xi Jinping making his first visit to India in seven years.

During their bilateral meeting, on the sidelines of the BRICS Summit, Modi and Xi committed to “a fair, reasonable, and mutually acceptable” resolution of the border issues, the Indian government said in a release.

The two leaders agreed that both countries must take a “strategic and long-term perspective of their ties” and not let differences become disputes.

Border disputes and a trade imbalance that works deeply in favor of China have been at the center of disagreements between the two neighboring countries.

Border issues between New Delhi and Beijing go back decades and saw the two countries go to war in 1962. However, last month, the two sides conducted the 25th round of talks and arrived at eight points of outcomes and consensus to resolve their long-standing border disputes.

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On the economic front, India has a massive trade deficit with China and has been dependent on exports from the world’s second-largest economy.

China is India’s largest business partner, with total trade at a record $151.1 billion in the year ending March 2026. But New Delhi’s deficit with Beijing has also risen to a record $112.16 billion, up from $99.21 billion.

According to the readout of the bilateral meeting, Modi and Xi agreed to address the concerns around structural trade imbalance, supply chain issues and predictable market access.

Ties between India and China have improved over the last year after Modi and Xi’s meeting in Tianjin last year. Direct flights have resumed between India and China, a few old Silk Road trade routes have opened, and in March India relaxed rules around investment from Beijing.

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