Chinese President Xi Jinping’s expected visit to New Delhi for the BRICS summit could give fresh momentum to India-China diplomatic engagement, but rebuilding economic ties is likely to be much harder.
The visit, which would be Xi’s first to India in seven years, comes as relations between the two Asian powers have gradually improved after years of tensions. Yet businesses on both sides continue to face regulatory scrutiny, visa difficulties, technology restrictions and uncertainty over investments.
The contrast highlights a key challenge for the relationship: political engagement is moving faster than commercial confidence.
Modi-Xi meeting could set the tone
Xi’s presence at the BRICS summit in New Delhi is widely expected, although Beijing had not formally confirmed the visit at the time of the Reuters report.
A meeting between Xi and Prime Minister Narendra Modi could be particularly important. The two leaders briefly met earlier this month at a regional forum in Kyrgyzstan, while their recent interactions have contributed to a gradual easing of tensions.
Relations deteriorated sharply following the 2020 border confrontation in eastern Ladakh, in which 20 Indian and four Chinese soldiers were killed. The episode deepened an already longstanding strategic distrust between the neighbours.
India’s Ministry of External Affairs has previously noted that the 2020 developments adversely affected bilateral relations.
Investment restrictions have eased, but cautiously
New Delhi has taken some steps to reopen economic channels.
In March, India eased certain restrictions on Chinese investment, particularly in areas such as electronics, capital goods and solar cells. The government has also been considering quicker approvals for some India-China joint ventures.
One significant example came in July, when India cleared a manufacturing partnership involving Dixon Technologies and Chinese smartphone maker Vivo.
However, the reopening has not yet resulted in a broad return of Chinese investment.
Major Chinese companies including BYD and Great Wall Motor have shelved planned investments after facing increased scrutiny in India, according to sources cited by Reuters.
The situation illustrates the gap between policy easing and business confidence: allowing selected investments does not necessarily mean companies believe the broader operating environment has become predictable.
Security concerns continue to influence business decisions
Financial technology remains one of the most sensitive areas.
India has stalled a proposal to connect Alipay+, operated by Ant International, with the country's Unified Payments Interface amid concerns involving national security and data protection. The proposal was the first major China-linked financial-services initiative to face such scrutiny since the 2020 border tensions.
Separately, India’s Serious Fraud Investigation Office has recommended a detailed investigation into Xiaomi’s Indian operations over alleged irregularities and possible violations of foreign investment rules.
Xiaomi has said it complies with Indian laws and that it had not received an official communication about the proposed investigation.
These developments underline why Chinese companies still face a higher level of scrutiny in sectors considered strategically sensitive.
China also appears cautious about technology flows
The concerns are not limited to India.
Indian sources cited by Reuters said Chinese authorities have also been discouraging companies from supplying certain critical technologies and infrastructure equipment to India, including products linked to ports, solar manufacturing and mobile-phone production.
Indian businesses have additionally reported delays involving Chinese equipment and components needed for sectors such as electronics, renewable energy and infrastructure.
One government source told Reuters that some large Chinese tunnel-boring machines intended for Indian infrastructure projects had been held up for more than a year.
Such delays add another layer to the relationship because India remains dependent on China for a range of industrial inputs and components, while Beijing is also cautious about technology transfers.
Direct flights and visas show signs of improvement
There have nevertheless been signs of a gradual return to normal engagement.
India and China resumed direct flights last year, while New Delhi also eased visa procedures for Chinese business professionals.
But business executives continue to report difficulties obtaining visas in some cases, suggesting that the improvement in people-to-people and commercial connectivity has not been uniform.
China’s Foreign Ministry told Reuters that visas are issued to Indian nationals with a genuine need to visit China in accordance with relevant laws and regulations.
‘Partners, not competitors’
Beijing has publicly signalled support for better relations.
China’s Foreign Ministry told Reuters that Xi and Modi view the two countries as “partners, not competitors” and as opportunities rather than threats to each other’s development.
Indian and Chinese officials nevertheless face a relationship shaped by competing strategic interests, unresolved border concerns and a significant trust deficit.
Analysts cited by Reuters said a Modi-Xi meeting could help remove some practical barriers, but expectations of a dramatic economic breakthrough remain limited.
The bigger test is economic confidence
For India and China, the next phase of the relationship may therefore be judged less by diplomatic photographs and more by what happens to businesses on the ground.
A successful Modi-Xi meeting could create political space for further investment approvals, easier travel and smoother supply chains. But companies are likely to seek greater clarity before committing large amounts of capital to long-term projects.
The challenge is particularly important as both countries navigate uncertain relations with the United States and seek greater economic resilience.
For now, the India-China relationship appears to be moving towards managed engagement rather than a full restoration of trust. Xi’s expected India visit could accelerate that process, but turning diplomatic warmth into sustained business confidence will require concrete changes beyond high-level meetings.
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