Xi-Modi Summit Fails to Reset India-China Economic Ties

China and India are major trading partners, but the relationship is heavily imbalanced. India depends on China for critical inputs such as electronics components, active pharmaceutical ingredients, capital goods and battery materials. This dependence became a strategic concern after the border standoff, pushing India toward a China+1 approach to diversify supply chains. China's own manufacturing dominance has deep roots in its 1978 reforms, which shifted the economy away from Maoist self-sufficiency toward openness to foreign technology, capital and trade. India's own opening came later, through the 1991 economic reforms that followed a balance-of-payments crisis. Liberalisation raised India's exports, attracted FDI inflows, and built up foreign exchange reserves, though agriculture's share of GDP kept declining rather than rising, reflecting a broader shift toward industry and services. These two reform paths, three decades apart, explain much of today's asymmetry between the two economies.

The recent visit by China's President to India, on the sidelines of the 18th BRICS Summit, was his first in nearly seven years and came alongside a separate eight-point consensus on the border question. Expectations were high that this diplomatic thaw would also unlock the stalled economic relationship, including revival of the Strategic Economic Dialogue and greater Chinese investment in Indian manufacturing. Those economic expectations remained largely unmet even as the border track showed real movement.