India’s reengagement with China in trade and investment is benefitting exporters

Easing of business Visa to Chinese experts has long term implications for manufacturers

By T N Ashok

When India quietly eased business visa rules for foreign engineers and technicians last month, the immediate beneficiaries were Indian manufacturers struggling with stalled factory lines and half-installed machinery. But the deeper signal was unmistakable: New Delhi is cautiously reopening channels with Beijing at a moment when its economic calculus is being reshaped by a hardening trade environment with the United States under President Donald Trump’s second term.

The reforms — digitised sponsorship letters, simplified visa forms, and the removal of multiple ministerial clearances — mark the most significant liberalisation of entry rules for Chinese professionals since India effectively froze such visas after the deadly 2020 border clash in Ladakh.

At the time, the freeze was both punitive and strategic, part of a broader decoupling effort that targeted Chinese investment, technology platforms and human capital. Five years later, India’s priorities have shifted.

Despite political rhetoric around self-reliance, India’s manufacturing ecosystem remains deeply entangled with Chinese industrial supply chains. From electronics assembly lines to solar module plants and heavy industrial equipment, Chinese machinery dominates — and that machinery often requires Chinese engineers to install, calibrate, maintain and upgrade it.

Industry executives estimate that the visa freeze alone cost Indian electronics manufacturers billions of dollars in delayed production, missed export orders and idle capital. The Observer Research Foundation has pegged the losses at roughly $15 billion over four years, a figure that has become increasingly difficult for policymakers to ignore as India pushes its “Make in India” and export-led growth ambitions.

By easing visas specifically for installation, commissioning, maintenance and training roles, the Modi government is acknowledging a hard truth: indigenisation without technical continuity is expensive, slow and commercially unviable in the short term. The timing of the visa liberalisation is equally telling.

President Trump’s return to the White House has brought back a familiar playbook — aggressive tariffs, transactional trade diplomacy and a renewed push to reshore manufacturing. While India is not China in Washington’s strategic hierarchy, it is no longer immune from tariff threats, stricter rules-of-origin requirements, or pressure to limit trade with Beijing.

For Indian exporters, especially in electronics, solar equipment, and emerging clean-tech sectors, the message is sobering: access to the U.S. market can no longer be taken for granted. That reality has forced New Delhi to hedge — diversifying economic partnerships while avoiding overt alignment shifts. China, paradoxically, becomes both a constraint and a solution.

One of the less visible drivers of the India–China thaw is rare earth processing — a sector where China’s dominance is near-total and India’s ambitions are rising. India possesses rare earth reserves but lacks large-scale, commercially viable refining and separation capacity. Industry analysts say Indian firms increasingly require Chinese technical collaboration — not just machinery, but process know-how — to refine rare earths into usable inputs for electronics, EV components and clean energy hardware destined for third-country markets.

Crucially, such exports are structured to avoid direct shipment to the U.S., reflecting sensitivities in Washington over Chinese-linked supply chains. According to diplomatic and industry sources, this understanding was part of broader confidence-building discussions during the Shanghai Cooperation Organisation summit in Tianjin, where India and China agreed to stabilise economic engagement without reopening unresolved strategic disputes.

The arrangement allows India to expand downstream manufacturing and exports to Asia, Africa and parts of Europe — while staying within the informal red lines of U.S. trade policy.

Prime Minister Narendra Modi’s meeting with President Xi Jinpingin August this year — his first bilateral engagement in seven years — did not resolve the border standoff. Troop disengagement remains incomplete, and trust is fragile. But the tone has shifted from confrontation to compartmentalisation.

New Delhi is signalling that geopolitical rivalry does not preclude economic pragmatism. Visa reform, in this context, is not a concession but a tool — a way to unblock stalled projects, preserve India’s manufacturing momentum, and buy time while domestic capabilities catch up.

At the same time, India has been careful to keep the changes administrative rather than political. The reforms are framed as efficiency measures, not a policy reset, allowing the government to reassure domestic constituencies and strategic partners alike.

India’s re-engagement with China is neither a pivot nor a rapprochement. It is a calculated adjustment to a harsher global trade environment, shrinking Western tolerance for supply chain ambiguity, and the economic costs of prolonged disengagement.

With Trump’s tariffs back on the table, global growth slowing, and industrial competition intensifying, New Delhi appears to have concluded that economic resilience requires flexibility — even with adversaries.

The easing of visas for Chinese professionals is thus less about friendship, and more about survival in a fragmented global economy where strategic autonomy increasingly depends on uncomfortable compromises. In today’s world, India is learning, non-alignment is no longer about distance — it is about dexterity. (IPA Service)