India 🇮🇳 and China have one of the most complicated relationships in Asia.

They are neighbours, major economies, important members of BRICS and two of the world's most populous countries. They also have significant trade ties and are deeply connected through manufacturing and supply chains.

At the same time, the relationship has been affected by border tensions, security concerns, restrictions on investment and technology, and a lack of trust between the two countries.

Now, there are signs that things are changing.

Chinese President Xi Jinping is expected to visit New Delhi for the BRICS Summit on September 12 and 13, 2026. It would be his first visit to India in seven years. The timing is significant because India and China have been trying to improve relations after years of tension following the 2020 border clashes. (Reuters) 

But improving diplomatic relations is one thing.

Getting businesses to trust each other again is another.

That raises a much bigger question: Can India and China repair their political relationship while also rebuilding economic and business ties?

The relationship has already started changing

The relationship between India and China became particularly difficult after the 2020 border clashes.

India responded with tighter scrutiny of Chinese investments, restrictions affecting several Chinese technology companies and greater attention to supply-chain dependence.

Businesses on both sides were affected.

But the situation has gradually started changing.

India has eased some restrictions on Chinese investment, particularly in areas such as electronics, capital goods and solar cells. New Delhi has also approved some joint ventures involving Indian and Chinese companies.

Direct flights have resumed, and visa procedures for Chinese business professionals have also been eased compared with the restrictions of previous years. (Reuters) 

These developments suggest that both governments understand something important.

It is difficult to completely separate geopolitics from economics, but it is also difficult to build a strong economy while completely ignoring major trading partners.

China remains extremely important to India's supply chains

Look around a typical Indian electronics store and the connection becomes obvious.

Smartphones, components, electronics equipment, solar products, machinery and industrial components often have some connection to Chinese manufacturing.

China has developed enormous manufacturing capacity over several decades.

For India, Chinese companies can provide components, machinery and technology at competitive prices.

For China, India represents one of the world's largest and fastest-growing consumer and manufacturing markets.

This creates a situation where the two countries may compete strategically while still needing each other economically.

That is not unusual in international trade.

Countries can be competitors in one sector and partners in another.

The trade imbalance remains a major concern

There is, however, a major problem.

India buys significantly more from China than it sells to China.

The issue becomes even clearer when looking at India's broader BRICS trade.

India's 10 BRICS partners accounted for nearly 42% of India's merchandise imports in FY2026, compared with around 22% of exports. India imported goods worth approximately $321.8 billion from those countries while exporting around $95.7 billion, creating a $226.1 billion trade deficit with the bloc. (Business Standard)

China is a major part of this equation.

For India, the challenge isn't simply increasing trade.

It is increasing balanced and productive trade.

India wants more exports, more manufacturing, more technology transfer and stronger domestic capabilities rather than simply importing more finished products.

That distinction will be important in the years ahead.

Can India use China without becoming dependent on China?

This may be one of the most important economic questions for India.

India wants to become a major manufacturing hub.

It wants to attract global companies.

It wants to expand electronics, renewable energy, electric vehicles, semiconductors, pharmaceuticals, infrastructure and advanced manufacturing.

All of these sectors require large and reliable supply chains.

China already dominates many parts of those supply chains.

So completely cutting China out would be extremely difficult and potentially expensive.

But becoming overly dependent on one country creates its own risks.

The answer may therefore not be complete separation.

It may be diversification.

India can continue buying where necessary while simultaneously developing alternative suppliers in India and other countries.

That gives Indian companies more options and reduces the risk of a single disruption affecting an entire industry.

The trust problem is still real

Diplomatic meetings can create headlines.

Business decisions take longer.

A company investing hundreds of millions of dollars wants to know whether regulations will remain stable.

It wants reliable access to technology.

It wants predictable customs procedures.

It wants employees to be able to travel.

It wants confidence that its investment will be protected.

This is where the India-China relationship still faces problems.

Reuters reported this week that businesses continue to face regulatory hurdles, visa delays and restrictions involving industrial equipment despite the broader diplomatic improvement. Some Chinese equipment needed for Indian infrastructure and industries has also reportedly faced customs delays. (Reuters) 

That tells us something important.

Political trust may be improving faster than business trust.

Technology makes the relationship even more complicated

Technology is probably the most sensitive area.

India wants Chinese investment and equipment in sectors where it can help accelerate manufacturing.

At the same time, India does not want critical technologies and infrastructure to become vulnerable to geopolitical pressure.

China faces similar concerns about technology access.

That is why areas such as telecommunications, semiconductors, electronics, artificial intelligence, electric vehicles, solar technology and digital infrastructure can become politically sensitive.

A country may welcome foreign investment in one industry while restricting it in another.

This is likely to remain part of the India-China relationship for years.

But there are areas where cooperation makes sense

Despite the tensions, there are many areas where cooperation could benefit both sides.

Trade is one.

Manufacturing is another.

Renewable energy is another.

India needs affordable technology and equipment to expand its clean-energy capacity.

China has enormous manufacturing capabilities in solar equipment, batteries and electric vehicles.

There are obvious economic opportunities.

The question is how to capture those opportunities without compromising India's strategic interests.

The same applies to pharmaceuticals, industrial machinery, consumer electronics and infrastructure.

The goal does not necessarily have to be unrestricted cooperation.

It could be selective cooperation with clear safeguards.

The BRICS Summit creates an opportunity

The upcoming BRICS Summit in New Delhi makes the timing particularly interesting.

India is hosting the summit at a moment when global trade is becoming more fragmented and geopolitical tensions are increasing.

The Indian government has already been pushing BRICS discussions toward trade, supply-chain resilience, services, digital cooperation and support for small businesses.

At the BRICS Trade Ministers' Meeting in Jaipur, members advanced work on global value chains, digitally delivered services and improving access to trade finance for MSMEs. (Press Information Bureau)

This creates an opportunity for India and China to discuss economic issues in a larger multilateral setting.

It also gives India a chance to push for practical outcomes rather than simply political statements.

Indian businesses are looking for opportunities

For Indian companies, better relations with China could open doors.

Indian manufacturers could potentially gain better access to Chinese markets.

Indian pharmaceutical, technology, engineering and consumer companies could explore new opportunities.

Indian exporters could benefit if market access improves.

Indian startups could potentially find partnerships in manufacturing and technology.

But there is another side.

If Chinese companies receive easier access to the Indian market, Indian businesses will also face stronger competition.

That means the government has to find the right balance.

Opening markets can create opportunities, but domestic companies need the ability to compete.

Small businesses could be affected too

This discussion isn't limited to giant corporations.

Small and medium-sized businesses can be affected by India-China trade decisions.

A small electronics manufacturer may depend on Chinese components.

A solar installer may depend on imported equipment.

A machinery company may need Chinese parts.

A retailer may sell products manufactured in China.

At the same time, another Indian company may be competing directly against those imports.

This is why trade policy can create both winners and losers.

A smart policy needs to consider the entire ecosystem rather than focusing only on import numbers.

Could India and China become stronger economic partners?

Yes, but probably not in the same way they were before the 2020 tensions.

The world has changed.

India is more focused on supply-chain diversification.

China is looking for new markets and stronger trade relationships.

The United States and Europe are increasingly using trade and technology policy as strategic tools.

Global companies are trying to reduce their dependence on any single country.

India is also trying to position itself as an alternative manufacturing destination.

In this environment, India and China may find it useful to cooperate in selected areas while continuing to compete in others.

That may actually be a more realistic model than expecting the relationship to become completely friendly.

Competition could actually be good for India

There is another perspective worth considering.

India does not necessarily need to defeat China economically.

It needs to become more competitive itself.

Competition with China has pushed India to think more seriously about manufacturing, infrastructure, logistics, electronics, renewable energy and industrial policy.

The more competitive Indian companies become, the less vulnerable India becomes to external suppliers.

If Chinese companies enter India, Indian companies should ideally become better, faster and more innovative because of that competition.

The ultimate goal should be a stronger Indian economy.

India's opportunity may be bigger than the China question

Perhaps the biggest lesson for India is that the China relationship should not be viewed only through the lens of imports.

India has an opportunity to build its own capabilities.

If Indian companies can manufacture more components domestically, develop better technologies, train more skilled workers and become competitive exporters, the country's negotiating position becomes stronger.

India can then cooperate with China where it makes economic sense without becoming excessively dependent on Chinese supply chains.

That is a much more sustainable strategy.

Can trust return?

Trust is probably going to be the hardest part.

Governments can announce new agreements quickly.

Businesses need years of consistent experience before they feel comfortable making large investments.

If visas become easier, customs become faster, regulations become clearer and companies see fewer unexpected restrictions, confidence will gradually return.

If new tensions emerge, businesses will probably become cautious again.

That is why the coming months and years will be more important than any single summit.

The real test will be what happens after the political meetings are over.

The bigger picture

India and China don't have to become close allies to become important economic partners.

They can disagree on borders.

They can compete for influence.

They can have different political systems and strategic priorities.

And yet they can still find areas where cooperation makes economic sense.

That is how much of international trade already works.

The United States and China compete while remaining major trading partners. European countries compete with each other while operating inside the same economic framework. India competes with many countries while also doing business with them.

The future of India-China relations may therefore be less about choosing between friendship and hostility.

It may be about finding a practical middle ground.

So, can business follow diplomacy?

It can, but it probably won't happen overnight.

The diplomatic relationship appears to be moving toward greater engagement, and the upcoming BRICS Summit gives both sides another opportunity to discuss trade, investment and economic cooperation.

But businesses will need more than political statements.

They will need predictable regulations, smoother visas, reliable supply chains, better market access and greater confidence that investments and technology will not suddenly become casualties of geopolitical tensions.

If those conditions improve, the economic relationship could grow significantly.

For India, the ideal outcome would not simply be more trade with China.

It would be better trade, stronger Indian manufacturing, more exports, more technology partnerships, more jobs and greater economic resilience.

That is where the real opportunity lies.

And perhaps the most interesting question is whether India can cooperate with China without losing sight of its own long-term economic goals.

What do you think? Should India 🇮🇳 open the door wider to Chinese investment and technology to accelerate growth, or should India continue reducing its dependence on China even if that makes some products and projects more expensive?

Reference: Reuters, Xi's India visit to help diplomatic thaw, but business ties bound by suspicion, September 10, 2026. (Reuters) 

Additional reference: Government of India, Press Information Bureau, India successfully concludes the 16th BRICS Trade Ministers' Meeting in Jaipur. (Press Information Bureau) 

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