Reprinted with the kind permission of the Global CIO Office
India and China: Pathways to Managed Interdependence
Setting the Scene
India and China are bound together by geography and sheer scale, yet their political trust deficit
remains challenging. Since the 2020 border clashes, relations have oscillated between frost and
fragile détente. However, there is improvement. Recent discussions in New Delhi – including the
resumption of direct flights, talk of reopening land crossings, and even whispers of ‘early harvest’
boundary agreements – suggest that a narrow but real opening is emerging. The challenge is to move
beyond episodic gestures and create what might be called managed interdependence: limited,
verifiable cooperation in areas where both stand to gain, while ring‑fencing the most sensitive
disputes. Are the Elephant and Tiger about to Tango?
Areas of Opportunity
Energy Transition Hardware: India’s ambitious clean‑energy goals require vast amounts of solar
panels, batteries and grid equipment. China dominates these supply chains. Carefully structured
supply agreements, tied to localisation and joint ventures, could lower India’s costs while giving
Chinese manufacturers a vast market outlet.
Pharmaceuticals: India is a global force in generics. For China, facing the burden of an ageing
population and rising healthcare costs, faster regulatory approval for Indian drugs would reduce
costs and diversify supply. A reciprocal opening could anchor a new strand of cooperation.
Agriculture and Seafood: Shrimp, spices and basmati rice already feature in bilateral trade. With
tighter cold‑chain and sanitary protocols, this could scale rapidly into a billion‑dollar plus flow that is
politically uncontentious.
Metals and Raw Materials: Indian iron ore and cotton yarn already flow to China. Long‑term offtake
agreements could stabilise supply for Beijing while protecting India’s domestic development
priorities.
IT and Services: China will not welcome large‑scale Indian IT players into its domestic data
ecosystem, but Indian firms can service Chinese multinationals’ global operations. This would extend
Indian capabilities without stirring sovereignty concerns.
Enduring Frictions
Borders and Sovereignty remain the hardest obstacle. Without robust patrolling protocols and agreed
buffers, another incident could unravel progress overnight.
Pakistan and Regional Security: Beijing’s close defence ties with Islamabad, and the China–Pakistan
Economic Corridor crossing disputed territory, are permanent wedges.
Technology and Data: New Delhi’s exclusion of Huawei and ZTE from 5G, and its growing scrutiny of
Chinese‑made equipment, reflects a deep strategic mistrust.
Defence Industry: Collaboration is off the table. The best that can be achieved is transparency and
mechanisms to prevent accidental escalation.
External Pressures
The United States looms large. Tariffs, sanctions and technology controls make any India–China
rapprochement more complicated. Washington’s restrictions on semiconductors and AI tools
already constrain Indian firms. Were similar controls extended to battery minerals or grid equipment,
India’s energy transition would feel the pinch. Put simply, the U.S. remains the biggest spoiler – even
indirectly – to an India–China reset.
Leadership Calculus
The days of the ‘Wuhan Spirit’ and ‘Chennai Connect’ are long past. Prime Minister Modi and
President Xi had little personal chemistry left after 2020. The conclusion of geopolitical watchers is
that the past weekend’s meeting could be a potential turning point. This weekend’s tentative reset is
less about grand gestures and more about measured institutional repair. That may actually be more
durable. The early feedback from both sides was that the meeting between the two leaders is a
positive step forward. If we were to summarise the read out from the direct meeting between Modi
and Xi Jingping it was that:-
1. A relationship defined by what each nation wants to achieve as opposed a relationship defined by what a third party (read US) might dictate.
2. Partners not rivals.
3. Cooperation between the two countries will make the 21st century truly become the Asian
century.
Looking Ahead
G20 Trade and Investment Working Group (October 2025): A chance to test softer trade language.
BRICS+ Summit (late 2025, Kazan): A platform where both can align without the glare of bilateral
talks.
COP30 in Brazil (November 2025): Clean‑energy pledges could be an area for joint announcements.
India’s Budget (February 2026): Domestic tariff and FDI measures will signal how open New Delhi is to
outside capital, Chinese included.
The Role of Others
Third countries can provide ballast. The UAE and Singapore offer trusted platforms for joint ventures
in logistics and finance. Russia retains influence with both capitals and has historically encouraged
stability. ASEAN states could host trilateral initiatives in trade facilitation. Europe, meanwhile, has a
vested interest in lowering global clean‑tech costs and may quietly encourage selective India–China
cooperation.
A Cultural Reminder
Despite the geopolitical rancour, history shows that India and China have periodically found ways to
work together. Buddhism spread from India to China, leaving a profound cultural legacy. The Silk
Road fostered trade for centuries without political union. Even in the 20th century, the Bandung
Conference (1955) and the brief ‘Hindi‑Chini Bhai Bhai’ spirit showed that cooperation is not alien –
only fragile.
The CIO Perspective
India and China will not sign a grand bargain, but they can make pragmatic deals. Stabilising the
border, securing supply chains for the energy transition, and expanding uncontentious trade (food,
raw materials, pharmaceuticals) could all form the basis of managed interdependence. The risk of
relapse is ever‑present – especially with U.S. policy shocks – but history and culture provide a
reminder that cooperation, though episodic, has always been part of the relationship.
