Media

As winter snows begin to melt along the Himalayas this spring, Indian and Chinese troops will once again start actively patrolling their respective positions along the Line of Actual Control (LAC) — the 2500-mile disputed boundary line between the two Asian neighbors. The disputed LAC — and the strategic mistrust it symbolizes — remains front and center in the India-China relationship. Despite a nascent thawing in bilateral ties over the past year, a broader strategic reset between Beijing and New Delhi remains out of reach given the underlying dynamics that drive the relationship.

Since late 2024, India has initiated measured efforts to normalize its relations with China, which had been significantly strained following the fatal Galwan clash between Chinese and Indian troops in 2020. These steps have included re-establishing direct commercial flights, enhancing people-to-people ties, enacting LAC confidence-building measures, and loosening restrictions on economic activity and foreign direct investment. India’s China diplomacy took place against the backdrop of the Trump administration’s overtures to Beijing and its tariff actions against India. In August 2025, when Indian Prime Minister Narendra Modi paid his first visit to Beijing since the Galwan incident, the optics of him smiling opposite Chinese President Xi Jinping stood in strong contrast to the rancor with President Trump over trade and tariffs.

When Outreach Encounters Mistrust

But India’s strategic hedging will only go so far, given the trust deficit that still casts a long shadow over Indo-China ties. Historically, the India-China pendulum has repeatedly swung between periods of strain and stabilization. As both countries strive to deepen stabilization, it is important to consider the following dynamics:

• Skepticism toward China remains widespread among India’s media, strategic elite, and general public, and negative news is quickly amplified by social media. For example, whenever Chinese authorities refuse a visa to an Indian citizen from a territory claimed by Beijing or release official maps depicting Chinese nomenclature for disputed areas, the Indian press swiftly seizes the story, constraining political space for policymakers.
• Domestic politics shapes India’s China policy to a significant degree. During his first term, Modi invested significant political capital to build personal rapport with Xi but was spurned by border crises at Doklam in Bhutan and Galwan. Modi is keen to avoid making the same mistake again. Any incident or crisis along the LAC, whether accidental or deliberate, could swiftly undo any progress made in bilateral relations. This is a mistake Beijing has made in the past.
• Infrastructure development along the LAC is proceeding at a fast clip.  Scarcely a month goes by without Indian media reporting on a new Chinese civil or military project near the border. Last year, China’s deployment of robot along the LAC triggered furious commentary in India. A senior Indian military official overseeing construction along the LAC recently stated that India will need another five years to achieve parity with China’s development. Indian officials are acutely sensitive to a potential intelligence lapse that fails to anticipate Chinese build-up in sensitive areas along the LAC, such as Depsang and the Siliguri Corridor.
• India’s trade deficit with China, a long-standing source of frustration for the Government of India (GOI), reached a record high of USD 116 billion in 2025. While Indian industry is eager for cheap Chinese industrial inputs — and has at times advocated for easing trade tensions — the growing deficit represents a political and strategic headache for New Delhi. If China fails to take steps to increase imports from India, it will strengthen calls in New Delhi to enact measures to address the imbalance, including additional anti-dumping duties.
• China’s ongoing military and technology cooperation with Pakistan will place a natural limit to the degree of Indo-Chinese rapprochement. Beijing’s military technologies were on full display during Operation Sindoor, the India-Pakistan clashes last spring. Increasing Chinese cyber-attacks on critical infrastructure, which saw an uptick during Sindoor, also represent a significant ongoing vulnerability for India.
• India is aware of its strategic weaknesses compared to China in critical minerals and as a lower riparian state. Last year, China began building the world’s largest dam at the Motuo Hydropower Station in Tibet, raising concerns about how this might affect river flows into India and Bangladesh.
• Since 1959, India has hosted the Dalai Lama and a large Tibetan refugee community inside the country — a long-running irritant for China. Upon the passing of the current Dalai Lama, the political dynamics and strategic considerations surrounding his succession are expected to become a significant issue between the two nations, particularly given that China is expected to advocate for its hand-picked successor.

Watch Out for Trump and BRICS

While U.S. policy toward China does not dictate India’s approach to China, it is an important factor in shaping New Delhi’s engagement. If President Donald Trump proceeds as expected with his visit to Beijing in April (and potentially invites President Xi for a state visit), it will turbo-charge fears of a “G2” construct among India policymakers. This will be further exacerbated by Trump’s continued delay in travelling to India for the Quad Leaders’ Summit.

The 18th annual BRICS Summit, which India is planning to host in August or September, will be another tempering factor. If President Xi Jinping, who last visited India in 2019, confirms his attendance, the GOI will be keen to keep bilateral ties on a stable footing to ensure a smooth summit. Commercial deals with Chinese firms are an important bellwether but will be taken up by the GOI on a case-by-case basis and likely to avoid sensitive sectors. Any major announcement, such as reversing the TikTok ban or a large automotive investment by BYD, is likely to carry stipulations to safeguard against geopolitical blowback.

What It Means for Businesses

More pragmatic commercial ties between India and China would increase Beijing’s economic clout in Asia, particularly in the face of U.S. policy volatility. For foreign firms with Chinese partners, reduced bureaucratic red tape in India will help address ease-of-doing-business concerns, such as visas and investment screening. At the same time, the GOI continues to closely monitor how foreign companies deal with China in comparison to other Asian partners. A particular sensitivity is how companies portray boundary disputes and map markers in internal and public materials.

For defense and cyber-security companies, India remains a pertinent market, particularly in terms of capabilities that can bridge the Indian’s military’s gaps with the People’s Liberation Army (PLA). During past LAC crises, the GOI has allocated significant budget outlays for emergency procurements on a fast-track basis.

India is also expected to continue policies to help diversify supply chains and reduce critical dependencies on China. The U.S. government is keen to partner with India on this front, as demonstrated by its invitation for India to join Pax Silica, an AI-supply chain resiliency initiative, which will be announced at the AI Action Summit in New Delhi February 19-20. The United States has also invited India to join the Strategic Minerals Initiative, which Secretary of State Rubio will announce at a summit in Washington on February 4. Both these initiatives will create opportunities for participation by private companies. The pending U.S.-India Bilateral Trade Agreement (BTA) contains a chapter on “economic security” though this is expected to be fleshed out in later stages. The GOI remains eager to partner with the United States on supply chain and economic security initiatives, but remains wary about policy volatility, particularly tensions between “friend-shoring” and President Trump’s insistence on domestic investments.

Basant Sangera is a managing principal at The Asia Group