Xi visits India to help diplomatic thaw, but trade ties shrouded in suspicion

Chinese President Xi Jinping’s long-awaited visit to New Delhi this week, his first to India in seven years, should boost the diplomatic thaw between the giant neighbors, but so far there are few signs that their trade ties will improve.

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Businesses in both countries continue to face obstacles, including investment stalled by regulations, visa delays and restrictions on industrial equipment, underscoring the gap between diplomatic progress and economic ties, analysts said.

While Mr Xi is widely expected to be in Delhi this weekend for the annual BRICS summit, Beijing has yet to confirm his visit and it is not known whether he will hold a meeting with Prime Minister Narendra Modi, which will be key to determining the future direction of bilateral relations.

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China and India fought a brief war in 1962, setting the stage for a wary relationship since then, which has soured after a border skirmish in 2020 killed 20 Indian and four Chinese soldiers. Still, relations have improved in recent years, particularly after Mr Modi visited China last year, and the two nations have struggled with volatile relations with the US.

“China certainly wants to improve relations, but we are waiting to see how much India is really willing to improve,” said Lin Minwang, a South Asia expert at Shanghai’s Fudan University and a former diplomat at the Chinese embassy in Delhi, suggesting that no dramatic progress was unlikely.

Harsh ‌Pant, ‌president of the Observer Research Foundation think tank in New Delhi, said the “trust gap” between the countries was high.

“China has economic strength and there is a good opportunity to take advantage of that and show itself as a reliable partner, especially as both nations are affected by US trade policies,” he added.

In March, India eased some restrictions on Chinese investment it had imposed after border clashes in 2020, targeting the electronics, capital goods and solar cell sectors. It is also considering faster approval of joint ventures between Indian and Chinese firms in some sectors.

New Delhi has since approved several major projects, including a manufacturing venture between India’s Dixon Technologies and Chinese smartphone maker Vivo Mobile.

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But that has not been enough to lure back top Chinese companies such as vehicle makers BYD and Great Wall Motor, which have shelved planned investments in India after facing increased scrutiny from New Delhi, according to an Indian government source.

Great Wall Motor and BYD declined to comment.

“Partners, not competitors”

Proposed investments by Chinese companies in India face greater scrutiny from Beijing itself, including in sectors where it may involve sophisticated manufacturing and high-tech, said the source and another person, both of whom spoke on condition of anonymity because they were not authorized to speak to the press.

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China’s Foreign Ministry told Reuters that Mr Xi and Mr Modi, who met briefly at a regional forum in Kyrgyzstan this month, believed the two countries were “partners, not competitors, and present opportunities, not threats, to each other’s development”.

India’s Ministry of Commerce and Ministry of External Affairs did not respond to requests for comment.

New Delhi has refused to approve a proposal by Alipay, a platform linked to China’s Ant Group, to link with India’s instant payments system, citing national security concerns, Reuters reported last week.

The Indian government is also considering a recommendation by its Serious Fraud Investigation Office that Chinese mobile phone maker Xiaomi be investigated for alleged irregularities in its business in India and violations of foreign investment laws, Reuters reported. Xiaomi said it complies with all local laws and has not received any communication from the SFIO.

At the same time, one of the Indian sources said Chinese authorities have asked companies not to sell critical technology and infrastructure to India, including port facilities, solar panels and mobile manufacturing equipment. China’s Ministry of Commerce did not respond to a request for comment.

Last year, India and China resumed direct flights and New Delhi eased visa procedures for Chinese business professionals.

However, some Indian businessmen with interests in China have recently had difficulty securing visas, ‌according to one of the sources and an industry executive.

China’s Foreign Ministry said it issues visas for “Indian nationals who genuinely need to visit China” in accordance with laws and regulations.

This year, Chinese-made equipment and components that India needs in key sectors such as solar power and electronics, as well as infrastructure development, have been held up at Chinese customs, an executive and two Indian sources said.

Some massive boring machines from China for key infrastructure projects in India have been held up for more than a year, a third Indian source, a government official, said.

Withholding visas and equipment “reflects more than administrative friction” and shows China’s willingness to use India’s trade and technology dependence as leverage, said Ajay Srivastava, founder of the New Delhi-based Global Trade Research Initiative think tank and a former Indian trade negotiator.

But a meeting between Mr. Modi and Mr. Xi could help remove some barriers if it goes well.

Anup Wadhawan, India’s former top trade official, said any meeting between the top leaders of the two countries “will always provide opportunities to better align political and economic interests”.

“Of course, trade ties are ultimately driven by the mutual economic interests of the citizens of both countries. However, bilateral discussions can lead to these avenues bearing fruit.”

Published – 10 Sep 2026 15:27 IST