Post by : Rohit Dhiman

Chinese President Xi Jinping is visiting New Delhi this week for the BRICS summit, marking his first trip to India in nearly seven years. The visit is expected to provide an important opportunity for Beijing and New Delhi to build on recent efforts to reduce tensions, although analysts caution that political progress may not immediately translate into stronger commercial relations. The two Asian powers have taken several steps toward improving their relationship in recent years. However, businesses on both sides continue to encounter regulatory restrictions, visa difficulties, scrutiny over investments and delays involving industrial equipment. Analysts say these obstacles demonstrate that the improvement in diplomatic relations has not yet eliminated the deep level of mistrust affecting economic cooperation.

Modi-Xi Meeting Could Shape Future Relations

A possible meeting between Xi and Prime Minister Narendra Modi during the BRICS summit could become one of the most closely watched diplomatic engagements of the event. Although Chinese authorities have confirmed Xi's visit, uncertainty remained over whether the two leaders would hold a formal bilateral meeting. Analysts believe such a meeting could help determine whether the recent diplomatic thaw develops into a broader improvement in political and economic relations. The two leaders briefly met earlier this month at a regional gathering in Kyrgyzstan. Their engagement comes against the backdrop of efforts by both countries to manage their relationship while also dealing with changing ties with the United States.

Border Tensions Still Influence Economic Relations

Relations between India and China have long been complicated by their disputed border. The countries fought a war in 1962, creating a lasting backdrop of mistrust. Tensions increased sharply following the deadly 2020 border confrontation in the Galwan Valley, in which soldiers from both countries were killed. Since then, New Delhi has introduced tighter scrutiny of Chinese investments and companies operating in sensitive sectors. While diplomatic contacts have gradually improved, the legacy of the border tensions continues to influence India's approach to Chinese businesses. Experts say restoring confidence will require more than high-level political meetings.

India Eases Some Investment Restrictions

India took a significant step toward improving commercial ties in March by easing some restrictions on Chinese investment introduced after the 2020 border clashes. The relaxation has focused on areas including electronics, capital goods and solar cells. New Delhi is also considering faster approvals for certain joint ventures involving Indian and Chinese companies. The changes have already resulted in some important approvals. One notable development was the approval of a manufacturing partnership involving Indian electronics company Dixon Technologies and Chinese smartphone manufacturer Vivo. However, analysts say these moves have not yet been enough to bring back several major Chinese companies that previously considered investing heavily in India.

BYD and Great Wall Motor Remain Cautious

Major Chinese automobile companies such as BYD and Great Wall Motor had previously considered significant investments in India but later shelved their plans amid increased scrutiny from Indian authorities. Their absence highlights the continuing uncertainty facing Chinese companies seeking to establish large-scale operations in the Indian market. The situation also demonstrates the difficulty of rebuilding commercial confidence after years of political and security tensions. Chinese companies are not the only ones facing restrictions. Indian businesses operating in China have also encountered challenges, including difficulties related to visas and access to certain technologies and equipment.

Technology and Equipment Become Another Flashpoint

Economic relations have also been affected by restrictions involving industrial technology. Indian sources cited by Reuters said Chinese authorities had placed restrictions on the sale of certain critical technology and infrastructure-related products to India. These reportedly include equipment used in ports, solar energy and mobile-phone manufacturing. Separately, Indian industry representatives have reported delays involving Chinese-made equipment and components needed for sectors such as renewable energy, electronics and infrastructure. Some large tunnel-boring machines intended for major infrastructure projects in India have reportedly faced lengthy delays at Chinese customs. 

Visa Issues Continue to Affect Businesses

Direct business engagement has also faced difficulties despite efforts to improve travel connectivity. India and China resumed direct flights last year, while New Delhi eased visa procedures for Chinese business professionals. However, some Indian businesspeople with commercial interests in China have reportedly experienced difficulties obtaining visas more recently. Chinese authorities have maintained that visas are issued to Indian nationals with genuine reasons to travel to China according to applicable laws and regulations. The continuing visa concerns illustrate how diplomatic improvements can take time to translate into smoother business activity.

China-India Trade Remains Important

Despite the political tensions, the economic relationship remains significant because both countries depend on each other in several areas. Indian industries rely on Chinese-made components, machinery and equipment across sectors including electronics, solar energy and infrastructure. At the same time, China views India as an important large market with considerable long-term commercial potential. This creates a complicated situation in which strategic mistrust exists alongside strong economic incentives for cooperation. Analysts therefore believe both governments have reasons to prevent political disagreements from completely disrupting commercial ties.

Alipay and Xiaomi Face Separate Challenges

The relationship has also been affected by regulatory scrutiny of individual Chinese companies. New Delhi has reportedly declined to approve a proposal involving Alipay, a platform associated with Ant Group, to connect with India's instant payments system. Security concerns were cited in relation to the decision. Chinese smartphone company Xiaomi has also faced scrutiny. India's Serious Fraud Investigation Office has recommended an investigation into alleged irregularities involving the company's operations and possible breaches of foreign investment rules. Xiaomi has said it complies with Indian laws and has not received communication from the investigation agency regarding the matter.

Experts Warn of a Persistent Trust Deficit

Analysts say the biggest challenge may not be individual regulations or business disputes but the broader lack of trust between the two governments. Fudan University South Asia expert Lin Minwang said China wants to improve relations but suggested that Beijing is waiting to see how far India is prepared to go. Harsh Pant of New Delhi's Observer Research Foundation described the trust deficit between the two countries as significant. He argued that China's economic strength could potentially make it a reliable partner for India, particularly as both countries face pressure from changing US trade policies. The comments underline the difference between diplomatic messaging and practical economic cooperation.

Beijing Calls China and India Partners

China's foreign ministry has sought to present the relationship in more positive terms. According to the ministry, Xi and Modi view the two countries as partners rather than competitors and believe their development should create opportunities rather than threats for each other. Such language reflects Beijing's desire to encourage a more stable relationship. However, analysts say the real test will be whether the two governments can translate diplomatic statements into concrete changes affecting businesses, investment approvals, technology access and travel.

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Can Modi and Xi Meeting Improve Business Relations?

A successful meeting between Modi and Xi could provide political momentum for removing some of the obstacles faced by companies. Former Indian trade official Anup Wadhawan said a meeting between the two leaders could create opportunities to better align political and economic interests. However, he also stressed that commercial relations ultimately depend on the economic interests of people and businesses in both countries. That means political leaders can create a more favourable environment, but companies will still need predictable regulations, easier movement of professionals, reliable supply chains and greater confidence before making major long-term investments.

Why Is Xi Jinping Visiting India?

Xi Jinping is visiting New Delhi to attend the BRICS Summit. His visit is particularly significant because it is his first trip to India in nearly seven years and comes as China and India attempt to improve relations after years of border-related tensions.

Will Xi Jinping Meet Narendra Modi?

A bilateral meeting between Xi Jinping and Prime Minister Narendra Modi is expected to be closely watched because it could influence the future direction of China-India diplomatic and economic relations.

Why Are China-India Business Ties Still Difficult?

Businesses continue to face challenges involving investment approvals, regulatory scrutiny, visas, technology transfers and industrial equipment. These problems reflect the continuing trust deficit between the two countries.

Where Is Xi Jinping Visiting?

Chinese President Xi Jinping is visiting New Delhi, India, for the annual BRICS summit. The visit is his first to India in nearly seven years.

What Is the Current State of China-India Relations?

Diplomatic relations have shown signs of improvement, but economic ties remain affected by security concerns, investment restrictions, visa issues and technology-related restrictions.

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