When Narendra Modi won a third term as India’s prime minister last month, he was congratulated by all the major global leaders. Except one. Xi Jinping, China’s president and general secretary of the Communist Party, did not send a congratulatory message to the Indian leader he has met more than 20 times in the past decade. In 2019, Xi was among the first to publicly congratulate Modi when he was reelected as prime minister. This year, Xi has conveyed his regards to Shehbaz Sharif in Pakistan and Sheikh Hasina in Bangladesh when they became prime ministers. It was Chinese Premier Li Qiang who sent a brief congratulatory message to Modi a week later, further underscoring the absence of any felicitous missive from Xi.
Other provocations followed, this time from Modi. His actions could be seen as a direct outcome of the result of the Indian elections, from which he had emerged diminished. Since then, he has been trying hard to project strength—and to satisfy his base, which sees China as an adversary.
At the same time, though, India is becoming more dependent on China economically. Indian corporates are publicly pushing the Modi government to make concessions to China. Even though the government argues that ties with China can’t be normal till the problems on the border are resolved, it is unable to prevent the deepening of economic relations. Meanwhile, Beijing is happy with the status quo, both on the border and in its state of bilateral ties with New Delhi. Even if some temporary solution is found on the border, the trust between the two sides has completely broken down. This means that the engagement between India and China will be sporadic and inconsistent, alternating between hope and disappointment. It is a tough spot for Modi to begin his third term as India’s prime minister, and a balancing act he will have to continue to strike.
For most Indians, China is an adversary and a threat. Last year, a Morning Consult poll revealed that Indians see China as India’s “greatest military threat”—43 percent of respondents named China, while only 13 percent cited Pakistan. A recent Pew Research survey shows only 18 percent Indians have a favorable view of China, the lowest figure among the middle-income countries surveyed. Emotions about China are running especially high in India since it lost 20 soldiers in a clash with the People’s Liberation Army on the border in June 2020, the first such loss of lives since 1975. There has been no closure of that episode.
Consequently, India’s foreign policy has become heavily clouded by the threat, real or perceived, posed by China. When Modi was recently in Russia, most Indian analysts justified his bearhug with President Vladimir Putin as an attempt to prevent Moscow from ending up as a Beijing lackey. “A Russia under sanctions goes deeper into the Chinese embrace,” wrote another former diplomat, “Modi’s hug was to pull it back.”
The election results were a political and personal setback to Modi. His party lost one-fifth of the seats and is dependent on two fickle regional allies for a parliamentary majority. In his own parliamentary seat, Modi’s winning margin came down sharply and his party’s candidates lost half the seats where he personally campaigned. (Five years ago, his party had won 80 percent of such seats.)
When populist authoritarians struggle, they turn inwards to rally their base. New Delhi officially adheres to a “One China” policy even though it has not reiterated that position since 2009. Modi has never officially interacted with any leader from Taiwan in his decade-long stint as India’s prime minister. But when the Taiwanese President Lai Ching-te congratulated him on X, Modi proceeded to thank him and state that he looked forward to a “mutually beneficial economic and technological partnership.” Beijing publicly protested about the virtual interaction, declaring China’s “position is very clear and India knows this well.”
Soon after, a high-level U.S. congressional delegation, led by Rep. Michael McCaul (R-Texas), chair of the House Committee on Foreign Affairs and including House Speaker Emerita Nancy Pelosi (D-Calif.) met with the Tibetan spiritual leader Dalai Lama at his Indian home. The visit was condemned in advance by China’s government and could not have materialized without the express permission of the Indian government. A day later, Modi hosted the same delegation.
Modi then decided to absent himself from the summit of the leaders of member countries of the Shanghai Cooperation Organization in Astana earlier this month. Before the Indian election results came in, many had expected Modi to meet Xi on the sidelines of the summit and find a breakthrough to the unresolved border crisis that has bedeviled ties between the two populous countries for over four years.
Pre-election optimism on engaging China sprang from Modi’s interview to Newsweek magazine during the voting period. To an international audience, Modi expressed his belief that “we need to urgently address the prolonged situation on our borders so that the abnormality in our bilateral interactions can be put behind us.” This idea gained credence as a new ambassador from China took his post in Delhi after a gap of 18 months.
But after a shrunken mandate, a bold political outreach towards Beijing has become a casualty. Having fashioned himself domestically as a strongman who will be tough in dealing with China, Modi has now trapped himself in a bind. In a survey of 7,000 Indians in 2020, 72 percent of those polled said “India can win against China” in a military conflict. The reality is different. A new report by a retired Indian general which evaluates the military capabilities of the two countries concludes that “China’s substantial investment in defense, driven by a robust and largely self-reliant defense industrial base, positions the PLA for significant advancements in both conventional and unconventional warfare capabilities.” Even in force structures, technological advancements and doctrinal developments, Beijing has a massive advantage over New Delhi. This gap, where India has limited military leverage over China, will not be bridged for a decade at least, and perhaps two.
With Modi missing at Astana, India’s foreign minister S. Jaishankar held a meeting with his Chinese counterpart Wang Yi on the sidelines. It was another occasion on which both sides stuck to their respective positions and talked past each other. Jaishankar linked “complete disengagement from the remaining areas in Eastern Ladakh and restor[ing] border peace and tranquility” with the “return of normalcy in bilateral relations.” Wang delinked the two, arguing for “properly handling and controlling the situation in the border areas, while actively resuming normal exchanges.”
These negotiations have reached a stalemate because the Indian side wants the Chinese to first disengage from two remaining disputed areas, Depsang and Demchok, before agreeing to step forces back from the rest of the border in eastern Ladakh. The PLA generals refuse to concede on these two areas and want India to agree to de-escalation from other places. India has deployed around 50,000 additional soldiers in the area for the past four years while American experts assess that around 20,000 PLA soldiers are deployed over the 250-mile front. India remains at a disadvantage in eastern Ladakh as its soldiers can’t access 26 of the 65 patrolling points they used to reach until 2020.
While the base expects Modi to take a tough line on China, Indians corporates want him to make concessions. China surpassed the U.S. as India’s biggest trading partner in fiscal 2023, albeit with a trade deficit of a staggering $85 billion. China now accounts for over 10 percent of India’s overall trade and 15 percent of its imports. The rhetoric of economic punishment and the harassment of Chinese firms by tax authorities has outlived its utility. India has no leverage left. It banned Chinese fashion giant Shein from selling products on its app in 2020 but the company is returning to India via Mukesh Ambani’s Reliance Retail. Another major Indian corporate, Tata, is looking at a majority stake in the Indian arm of Chinese mobile manufacturer Vivo. Chinese mobile brands still have a 75 percent share of the Indian mobile market. China’s SAIC Motor has announced a $1.5 billion tie-up with Indian steelmaker JSW to build and sell MG-branded EVs in India. There are more proposals in the pipeline as the government has hinted at clearing them if Indian firms have a majority share. The delay, if any, is due to the reluctance of the Chinese companies.
Other top Indian corporates like the Adani Group, seen as a Modi favorite, want Chinese workers to be given visas on priority to install new machinery as manufacturing has stalled. Even the government’s own ministries are pressing for removing visa restrictions for Chinese technicians. The Modi government has already been forced to expedite visas for some Chinese citizens for projects that fall under its production-linked incentives scheme—the billions of dollars’ worth of subsidies earmarked to promote manufacturing in India.
Confederation of Indian industry, the country’s largest corporate lobbying group has told the government to review a 2020 rule which restricts Chinese investment in India. It has also asked the government to adopt a non-restrictive approach towards investments, component imports, openness towards technology transfer in deficient areas, ease of inward movement of skilled manpower and easing of non-trade tariffs against China. The government is under pressure from the electronics industry which claims that the restrictions on China have cost them $15 billion in production losses over the last four years. Modi’s party suffered in the elections due to his poor record on generating employment and he can no longer afford to turn a deaf ear towards demands of the manufacturing sector.
Not only is New Delhi unable to decouple from Beijing, it also can’t de-risk its economic dependence on China in critical sectors such as pharmaceuticals, electronics, solar power cells, electric vehicles and heavy machinery.
Demonstrating strength is a domestic imperative for a politically diminished Modi. These gestures are often hollow and misdirected. Direct India-China flights, which reached a peak in December 2019 with 539 scheduled flights, have not resumed since they were stopped during the pandemic. New Delhi refuses to accede to Beijing’s request to do so. China is providing more than 2,000 visas to Indian citizens every day while Indian restrictions remain on regular Chinese visitors. More than 20,000 Indian students have returned to China for higher studies. India has a single journalist remaining in Beijing while there is no Chinese journalist left in Delhi.
Modi is running out of options and his recent tactics only demonstrate a lack of imagination in breaking the impasse with Xi. He is being forced to make concessions to Beijing while remaining constrained by his own choices. A peaceful and normal relationship between the world’s two most populous countries looks unlikely anytime soon.