India-China Relations

Context:

Three months after negotiating an end to the military stand-off at the Line of Actual Control (LAC), India and China agreed to concrete measures to resume direct flights, visas, people-to-people exchanges, and the Mansarovar Yatra for pilgrims this summer. They agreed to resume the dialogue on trans-border rivers and sharing of hydrological data that China has withheld for years.

Critical Accomplishments and Actions

• Flights and Visa
  • India and China have decided to restart direct flights and the resumption of the issue of visas in order to further facilitate ease of movement and travel.
• Mansarovar Yatra
  • The Mansarovar Yatra will restart during the summer, marking an important milestone in religious and cultural dialogue.
• Hydrological Cooperation
  • Both sides agreed to resume talks on transborder rivers, including the resumption of sharing hydrological data that. China had earlier refused to share.
• Celebratory Events 75th Anniversary of Diplomatic Ties
  • India and China are planning to celebrate the milestone with various celebratory events aimed at rebuilding trust and fostering goodwill Strategic Dialogue
• HighLevel Meetings
  • The talks were part of a wider bilateral dialogue mechanism between Indian Foreign Secretary Vikram Misri and Chinese Vice Foreign Minister Sun Weidong, following the impetus from the ModiXi meeting in Kazan.
• Economic Cooperation
  • Both sides addressed specific trade and economic concerns to enhance transparency and policy predictability.
• India’s Concerns
  • Restrictions on APIs and hightech exports delayed critical equipment such as TBM.
• China’s Concerns
  • India imposes barriers to investing in the country denial of business visas and raids on Chinese telecom companies.

Geopolitical Implications

• LAC Tensions
  • These steps are taken three months after the de-escalation of tensions along the Line of Actual Control (LAC), which is a step towards stability and dialogue.
• Shanghai Cooperation Organisation (SCO)
  • India has assured support to China’s leadership of the SCO with PM Modi likely to attend the summit in June.
• Ongoing Challenges
  • Hydropower Issues: China’s hydropower project on the Yarlung Zangpo, Brahmaputra continues to raise strategic concerns in India.
  • Future Summits: Even though dialogue mechanisms have resumed, no confirmation has been made regarding an informal Modi-Xi summit in 2025.

India-China Relations Significance

• Economic and Trade Dependences
  • Trade ties China is the largest trading partner for India despite border frictions with two way commerce at USD 1184 billion in FY 2023-24.
• Industry LMPs
  • Import dependency is more than 70 in the sector of APIs or active pharmaceutical ingredients received from China which makes the pharmaceutical a super dependent industry.
  • India imported more than USD 12 billion worth of electronic components from China in 2023-24.
  • Almost 80 of India’s solar equipment is imported and of that more than 60 comes from China.

Technology and Digital Infrastructure

• Smartphones
  • Chinese companies lead India’s smartphone market with a 75 market share
• Telecom Equipment
  • Although there are some restrictions, Chinese components are still part of critical telecom equipment.
• Electric Vehicles
  • China is a significant contributor to India’s electric vehicle industry which provides battery technology and other necessary components.

Investment and Expertise

• Unicorn Startups
  • Many Indian startups have seen substantial Chinese investments which have been vital for their growth.
  • In 2020, 18 unicorn companies in India had over USD 3500 million in Chinese investments.
• Trade Route Dependency
  • More than 55% of India’s trade goes through the South China Sea and Malacca Straits, where China has a near monopoly.
  • Most of Indias Southeast Asian trading partners are economically integrated with China.

Key Areas of Conflict Between India and China

Border Conflicts and Territorial Claims

• Line of Actual Control (LAC)
  • The 3488 km Line of Actual Control (LAC) often becomes a point of contention as India and China have tense military standoffs particularly since May 2020.
  • China already occupies 38000 sq km in Aksai Chin and claims 90,000 sq km of Arunachal Pradesh South Tibet.
  • The development of dual use villages and military infrastructure along the LAC by China exacerbates the situation.

Economic Imbalances and Trade Deficit

• Trade Deficit
  • India incurs a 85 billion trade deficit with China during 2024 with imports soaring despite antidumping measures.
• Backdoor Entry
  • Chinese products often enter India through ASEAN and bilateral FTAs.

Water Resource Disputes

• China dominates the upper reaches of the mighty rivers like Brahmaputra Yarlung Tsangpo flowing through India.
• The absence of a watersharing treaty has led to conflict particularly following Chinas stoppage of releasing hydrological data in 2017.

Cyber Threats

• Cybersecurity
  • China linked hackers targeted Indian power hubs and orchestrated attacks such as the AIIMS Delhi ransomware attack.
• App Bans
  • More than 300 Chinese apps have been banned since 2020 due to security concerns.

Regional Influence Competition

• Chinas Belt and Road Initiative (BRI)
  • Especially in Pakistan, Sri Lanka and Myanmar challenges India’s regional influence.
  • The strategic military alliances China is forging with Pakistan and its increasing influence over Nepal, Sri Lanka and Bangladesh.

Strategic Alliances and Regional Tensions

• India’s proximity to the US and the QUAD is an anathema for China.
• Chin’as military presence in the Indian Ocean and its increasing naval deployments even in strategic ports like Hambantota in Sri Lanka is a matter of concern for India.

Diplomatic and Global Forum Tensions

• China shields Pakistan based terrorists from UN forums, it also never relents over India’s ambitions for the UN Security Council seat and Nuclear Suppliers Group membership.

Ways for India to Maintain Parity with China

• Diversification of Indian Economy and Auto Dependency
  • Scaling up PLI plans to diminish its dependence on imported Chinese products.
  • Developing Production capabilities for domestic manufacturing in areas such as, APIs, electronic equipment, solar equipment by forming Semi conductor Mission.
  • Build cooperation ties with Japan, South Korea and the EU on investment in key sectors and transfer technologies.
• Strategic Military Modernization
  • Rush to construct military infrastructure in the LAC like roads and forward operating bases.
  • Develop more robust surveillance with a focus on the use of satellite and drone capabilities.
  • Reinforce mountain warfare as well as the quick reaction force.
• Strengthen Regional Leadership
  • Develop stronger ties with the neighbors through developmental aid and projects on infrastructure.
  • BIMSTEC and Indian Ocean Rim Association (IORA) initiatives to be enhanced to counter the influence of China.
• Diplomatic Engagement Strategy
  • Continued engagement through multilateral forums like SCO and BRICS with enhanced QUAD partnerships.
  • Coalitions with like minded countries on specific challenges to be developed with strategic autonomy in global diplomacy.
• Economic Leverage Development
  • Utilization of India’s market strength for better trade terms with China.
  • Redirect global supply chains to India through initiatives like China1 and the PM Gati Shakti program.
  • Strengthen India’s position in global trade through free trade agreements FTAs with the UK, EU and other markets.
• Maritime Strategy Enhancement
  • Strengthen India’s naval presence and capabilities in the Indian Ocean Region.
  • Improve port infrastructure and connectivity through the Sagarmala Project.
  • Increase maritime cooperation with QUAD nations and ASEAN countries and thereby monitor strategic maritime routes better.