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CHINA and India are moving closer diplomatically, but persistent barriers to investment, technology transfers and business travel are underscoring how far economic ties still lag behind the political rapprochement.
Xi Jinping is widely expected to visit New Delhi this weekend for the annual BRICS summit, potentially for his first visit to India in seven years, although Beijing has yet to confirm the trip or whether he will meet Prime Minister Narendra Modi.
Any meeting between the leaders would be closely watched for signs of whether the recent improvement in relations can translate into a broader easing of economic restrictions between the world’s two most populous countries.
The relationship deteriorated sharply after a 2020 border clash in which 20 Indian and four Chinese soldiers were killed, but ties have improved in recent years, including after Modi visited China last year and as both countries navigate increasingly volatile relations with the United States.
“China certainly wants to improve ties, but we are waiting to see to what extent India is actually willing to improve them,” Reuters reported Lin Minwang, a South Asia expert at Shanghai’s Fudan University and a former diplomat at the Chinese Embassy in New Delhi saying, suggesting that any dramatic progress was unlikely.
Harsh Pant, vice president at New Delhi’s Observer Research Foundation think tank, said the “trust deficit” between the countries remained high.
He added: “China has economic heft and there is a good opportunity to use that and emerge as a reliable partner, especially when both nations are impacted by America’s trade policies.”
India eased some restrictions on Chinese investment in March, particularly in electronics, capital goods and solar cells, and is considering faster approvals for joint ventures between Indian and Chinese companies in some industries.
New Delhi has since approved several significant projects, including a smartphone manufacturing venture between India’s Dixon Technologies and Chinese handset maker Vivo Mobile.
But the moves have yet to bring back major Chinese investors such as vehicle makers BYD and Great Wall Motor, which shelved planned investments in India after coming under increased scrutiny from New Delhi, according to an Indian government source.
Great Wall Motor and BYD declined to comment.
Chinese companies seeking to invest in India are also facing greater scrutiny from Beijing, particularly in sectors involving sophisticated manufacturing and advanced technology, according to two people familiar with the matter.
“Partners, not competitors”
China’s Foreign Ministry told Reuters that Xi and Modi believed the two countries were “partners, not competitors, and they represent opportunities, not threats, for each other’s development”.
India’s trade and foreign ministries did not respond to requests for comment.
Meanwhile, New Delhi has declined to approve a proposal by Alipay, a platform linked to China’s Ant Group, to connect with India’s instant payments system, citing national security concerns.
The Indian government is also considering a recommendation by its Serious Fraud Investigation Office that Chinese smartphone maker Xiaomi be investigated over alleged irregularities in its Indian operations and possible breaches of foreign investment laws.
Xiaomi has said it complies with all local laws and has not received any communication from the SFIO.
At the same time, Chinese authorities have asked companies not to sell critical technology and infrastructure to India, including port equipment, solar panels and mobile phone manufacturing equipment, according to an Indian source.
China’s Commerce Ministry did not respond to a request for comment.
The two countries resumed direct flights last year and India eased visa procedures for Chinese business professionals, but some Indian business people with interests in China have recently struggled to secure visas, according to an Indian source and an industry executive.
China’s Foreign Ministry said it issues visas for “Indian nationals who have a genuine need to visit China” in accordance with the law and regulations.
Chinese customs have also held up equipment and components needed by India for key sectors including solar energy, electronics and infrastructure development, according to the industry executive and two Indian sources.
Some large boring machines imported from China for major infrastructure projects in India have been held up for more than a year, a third Indian source, a government official, said.
The delays involving visas and equipment “reflects more than administrative friction” and demonstrate China’s willingness to use India’s dependence on trade and technology as leverage, said Ajay Srivastava, founder of New Delhi-based think tank Global Trade Research Initiative and a former Indian trade negotiator.
A meeting between Modi and Xi could nevertheless help dismantle some of the barriers if it goes well.
Anup Wadhawan, a former senior Indian trade official, said a meeting between the leaders would “always afford opportunities to better align political and economic interests”.
“Of course, commercial ties are ultimately driven by the mutual economic interests of the citizens of both countries. Bilateral discussions can, however, work towards enabling these pathways to fructify.” - September 10, 2026
