Has India made friends with China after the Modi-Xi agreement?

“Modi and Xi make friends” announced the Economist following Indian Prime Minister Narendra Modi and Chinese President Xi Jinping’s meeting in Kazan. The newspaper subsequently declared that, following an agreement on disengagement and patrolling, the Sino-Indian border stand-off had been “resolved.”

These developments are noteworthy, but they must not be over-read. It is significant that, if implemented, the agreement could ease tensions between China and India stemming from their border crisis in 2020. But current and former Indian officials are striking notes of caution, including about getting “lulled into a false sense of security.”

Modi and Xi’s meeting—their first in five years—signals a tactical thaw rather than a strategic shift away from Sino-Indian rivalry. Steps remain to resolve the 2020 border row, and the two countries have several serious differences beyond their broader border dispute. So, think of this as akin to Washington’s effort to stabilize or set a floor to the U.S.-China relationship, rather than the beginning of a beautiful friendship between New Delhi and Beijing. For India, China will remain the pacing challenge.

The context

It has been evident for a few months that China and India were working toward an agreement. Military and diplomatic officials have met for the last four years to discuss the border stand-off. But New Delhi seemed to detect a window of opportunity recently, as Beijing faces strategic and economic pressure, and is uncertain about the U.S. election (or tries to take advantage of it).

India, too, has reasons to try to ease the situation. These include preventing another border escalation; recognition that India needs time to build its capabilities and partnerships; the need to grapple with the adverse impact of global crises; uncertainty about the next American president’s approach to China; concern that its partners’ outreach to Beijing could leave India vulnerable; perhaps a desire to create some leverage vis-à-vis with those partners; and calls for selective Indian economic re-engagement with China (including from some American companies).

What we know about the agreement

Specifics are still emerging, but we do know that the agreement heralds a return to dialogue. Beyond the Modi-Xi meeting, the countries announced the revival of suspended consultations, including the special representatives’ talks, and regular foreign ministerial and other exchanges.

Indian officials announced that the first part of resolving the 2020 border stand-off, i.e. disengagement, has been completed, with new patrolling arrangements at some points of friction (around Depsang and Demchok in the western sector, and Yangtse—site of a 2022 skirmish—in the eastern sector).

However, this is not a return to the status quo ante. Questions remain about how the new patrolling and grazing terms compare with what existed before, and whether new buffer zones created at other friction points would persist. Moreover, two further steps—de-escalation and de-induction of troops that have been forward deployed—have not been taken.

The agreement also doesn’t signify a normalization of Sino-Indian ties, as some observers contend. The Indian foreign secretary said that it opens the pathway to more normal ties, but stressed that is contingent on both sides actually walking that path.

Given the Indian sense that China violated previous bilateral agreements in changing the status quo at the border in 2020, there is little, if any, trust that Beijing will walk that path. So, India will closely watch Beijing’s implementation of the agreement and seek to verify that China is following through on its commitments. Further Indian steps vis-à-vis border negotiations or other issues may be linked to Beijing doing so.

If there is progress, there are several areas where India could review the limitations it has imposed on cooperation with China. A few possibilities: restarting various dialogues (diplomatic, military, and economic) that have been suspended, restoring direct flights, more civil society interactions, granting more visas (including for journalists), specific cooperation on multilateral issues (e.g. global economic governance reform), and selective economic re-engagement.

There is no consensus—even among Indian businesses—on the desirability or extent of economic ties with China. But if there is progress at the border or in negotiations, India could ease restrictions in areas that are less sensitive or where there is hope that, on balance, cooperation will be beneficial in the short term for Indian labor, manufacturing, and exports. A blanket lifting of restrictions is unlikely; streamlining the scrutiny or case-by-case approval process is possible.

There have already been some approvals of visas and imports when the Indian government saw those as necessary to enable companies—from India or friendly foreign countries—to make India part of global supply chains and generate jobs. In certain areas, India could make the condition of any Chinese investment a joint venture with a local company.

Different readouts, different vibes

Most Indian officials don’t seem to be under any illusions that the path ahead will be easy. The persistent gap between China and India has already been evident in how they have messaged these agreements.

Both the Indian and Chinese readouts stated that they reached an understanding on the border and agreed to enhance strategic communication.

But that’s where the similarities ended. India emphasized its “border before broader” prioritization, reinforcing border peace and tranquility as a prerequisite for broader ties. China, on the other hand, maintained its “broader before border” focus, stressing that “specific disagreements” should not derail the broader relationship.

In addition, China suggested that India had agreed to return to economic cooperation to enable development, while India was more non-committal, saying it was open to exploring it. More broadly, the Chinese readout also suggested that Modi who was the one interested in proposing ways to deepen ties, with Xi then agreeing “in principle” to consider it.

The countries’ diverging visions of their global and regional role were also striking. India noted that both leaders affirmed that stable and amicable ties would “contribute to a multipolar Asia and a multipolar world” but the Chinese statement only mentioned the desire for a multipolar world. This will only reinforce Indian concerns that Beijing seeks a unipolar Asia. India, in turn, did not echo or endorse Xi’s declaration that China was “a member of the Global South.”

The gap between India’s worldview and that of China (and Russia) was also clear in Modi’s remarks at the BRICS summit. He cautioned against the group being seen as divisive (i.e., anti-Western) and out to upturn the international order. His words also conveyed concern that BRICS expansion, encouraged by Beijing and Moscow, would dilute India’s role and influence.

Important step, but not a strategic reset

These divergences, among others, reveal that New Delhi and Beijing aren’t on the same page. Moreover, absent a significant change in China’s intentions and actions, the recent agreement will not herald a strategic shift away from India’s rivalry with China.

For one, the border has changed for good. De-escalation and de-induction will be difficult, if not impossible, given the troop, equipment, and infrastructure buildup on both sides of the Sino-Indian border since 2020. India also distrusts China and will want to remain prepared if the People’s Liberation Army takes action again. One former Indian ambassador to China has already cautioned that it would be tougher for India (than China) to re-induct troops into that sector of the border if Beijing reneges from its commitments.

Even beyond the ongoing border dispute, there are several other bilateral, regional, and global differences between India and China—and there has been no let-up in Chinese assertiveness on any of those fronts yet.

Thus, even as New Delhi reengages Beijing in dialogue, it will continue to try to strengthen its resilience and deterrence. It will maintain its de-risking approach and likely limit exposure to China in critical infrastructure, technology, and telecom sectors. It will continue to enhance Indian capabilities and capacities across the board, though it will have to guard against calls from certain quarters that there’s less urgency to do so. And it will likely continue to deepen its balancing partnerships, including with Washington.

Some partners might wonder if India will become more reticent to cooperate with them, so as not to derail its reengagement with China. But even as it has been negotiating with Beijing, New Delhi has not held back—as it might have pre-2020—on taking several steps. These include Modi’s reply to Taiwanese President Lai Ching-te; India’s welcoming of a U.S. Congressional delegation that met with the Dalai Lama and criticized China; the Quad summit, which included tougher language on China’s assertiveness in the South China Sea and security cooperation initiatives; hosting maritime exercise Malabar and multilateral air force exercise Tarang Shakti; participating in a maritime reconnaissance exercise with its Quad partners on the sidelines of Australia’s exercise Kakadu; and the opening of a third Taiwanese representative office in India.

This might be due to a change from the sentiment that deepening ties with the United States and Western partners would provoke China, to believing—since 2020—that deeper ties with balancing partners would deter Beijing.

Nonetheless, it won’t be surprising if partners continue to monitor the possibility of Indian hesitation to cooperate with them vis-à-vis China in the future. It would be helpful if New Delhi is as transparent as possible with its partners about its discussions with China and their implications—something its partners should reciprocate regarding their own outreach to Beijing.

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