India and China relations are shifting dramatically as New Delhi’s back-to-back trade agreements with both the United States and also the European Union create new tensions within the BRICS bloc. The twin deals, announced within days of each other in early February 2026, have catalyzed significant leverage for India over Beijing across multiple strategic dimensions at a critical moment for geopolitical alignment, just as India assumes the BRICS chairmanship this year.
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India China Relations Shift Amid BRICS Tensions And Trade Deals
US-India Trade Deals Reshape Regional Power Balance
The US-India trade deals framework announced on February 6, 2026, and the way it is, at the time of writing will cut American tariffs on Indian products by half to 18 percent, a major change in India and China relations. By dint of several great diplomatic projects, Ambassador Jamieson Greer headed the negotiation and said the following:
“President Trump’s dealmaking is unlocking one of the largest economies in the world for American workers and producers, lowering tariffs for all U.S. industrial goods and a wide array of agricultural products.”
The agreement came just days after India and also the European Union finalized a landmark India EU free trade agreement, which both sides hailed as the “mother of all deals.” Across several key geopolitical dimensions, Ivan Lidarev, a visiting research fellow at the National University of Singapore’s Institute of South Asian Studies, stated:
“India is likely to gain greater leverage in its relations with China as a result of the trade deals and therefore will be less accommodating to Beijing, particularly on trade and investment issues.”
BRICS Geopolitical Strategy Faces Internal Divisions
With Delhi holding the BRICS geopolitical strategy chairmanship in 2026 right now, and such as the current situation stands, India’s westward economic tilt complicates cooperation within the Beijing-led grouping. Through numerous significant bilateral consultations, Lin Minwang, professor and vice-dean at Fudan University’s Institute of International Studies, noted that bilateral ties had already:
“hit rock bottom”
and were “unlikely to deteriorate further.”
India’s Commerce Minister Piyush Goyal confirmed the deal protects:
“sensitive agricultural and dairy products”
At the time of writing, and also during recent diplomatic exchanges, Indian Prime Minister Narendra Modi stated:
“President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace.”
China Reduces US Treasuries Holdings
In a related development showing broader geopolitical tensions right now, and such as multiple financial analysts have noted, Chinese regulators advised major financial institutions on February 9, 2026, to reduce their holdings of US Treasuries, citing concerns over concentration risks and market volatility. The directive has accelerated significant portfolio rebalancing across numerous major Chinese banks, with yields on 10-year US Treasuries rising to 4.25% following the news. China’s total US Treasuries holdings fell to $682.6 billion in late 2025, and also represent their lowest level since 2008.
Xi Junyang, a professor at the Shanghai University of Finance and Economics, explained:
“The decrease in China’s holdings of the US treasuries is a result of increased optimisation and diversification of holdings of foreign assets seen in recent years, which helps strengthen the overall safety and stability of the portfolio.”
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The timing of China’s US Treasuries move, just weeks ahead of a planned meeting between President Xi Jinping and also US President Donald Trump in April 2026, underscores the complex dynamics affecting India China relations and the broader BRICS geopolitical strategy this year. Across several key economic and strategic dimensions, as India gains leverage through its US-India trade deals and the India EU free trade agreement, the balance of power within BRICS is being tested like never before.