^{Photo: South China Morning Post}

India and China, two of Asia’s biggest economies and fiercest rivals, appear to be edging closer together as both nations grapple with intensifying trade pressures from Washington. Indian Prime Minister Narendra Modi’s visit to Tianjin for the 25th Shanghai Cooperation Organization (SCO) summit, where he is set to meet Chinese President Xi Jinping, has sparked renewed debate on whether necessity can transform hostility into partnership.

The Tariff Backdrop and Growing Necessity

The United States’ widening tariff regime has put Beijing and New Delhi in a similar bind. Both nations face economic strain from shifting global supply chains and the reshaping of trade alliances. While India has attempted to seize the “China Plus One” opportunity by positioning itself as a manufacturing hub, it still depends heavily on China for raw materials and intermediate goods.

For example, China supplies 70% of India’s pharmaceutical APIs and nearly 90% of biosimilar APIs, while also dominating supplies of electronics, machinery, and organic chemicals. India’s $99.2 billion trade deficit with China in the fiscal year ending March 2025 underscores this imbalance, up from $85 billion the year before. Imports from Beijing reached a record $113.45 billion, showing how entrenched China remains in India’s supply chain.

Border Disputes and Lingering Suspicion

Despite the economic necessity, relations remain strained. Memories of the 2020 Galwan Valley clashes, where soldiers from both sides were killed, have left scars on public and political trust. India continues to view China as a threat, particularly over its strategic alliance with Pakistan, which receives more than 60% of China’s arms exports. This dynamic has kept New Delhi cautious, even as trade realities force dialogue.

India’s EV Sector: A Double-Edged Opportunity

Electric vehicles represent one of the most promising yet vulnerable areas of cooperation. India has set a bold target for EVs to account for 30% of new vehicle sales by 2030, up from 7.6% in 2024. Yet much of this growth relies on China, which dominates global supplies of rare earth magnets, lithium, and cobalt.

Chinese Foreign Minister Wang Yi, during his recent Delhi visit, offered assurances that Beijing would support India’s demand for rare earths and other key resources. For China, India’s fast-growing EV market offers a critical outlet amid domestic overcapacity and falling demand in the U.S. For India, Chinese supplies are essential to keep its green transition on track.

Signs of Warming Trade Relations

Beyond EVs, there are other signs of potential cooperation. Direct flights between India and China are set to resume after being suspended since the pandemic. Border trade at three points is reopening. Indian giants like Reliance Industries and Adani Group are exploring partnerships with Chinese firms. Even companies like BYD, China’s EV powerhouse, are keen to establish operations in India, following the footsteps of Vietnam’s VinFast.

Strategic Risks and Political Realities

Still, experts warn that this newfound engagement is fragile. India continues to ban a host of Chinese companies, from Shein to TikTok, over security concerns. Meanwhile, China’s close ties with Pakistan remain a major irritant. Analysts argue that while economic logic pushes cooperation, geopolitical mistrust limits long-term partnership.

As Modi and Xi meet in Tianjin, the summit is unlikely to resolve decades-old disputes or erase national suspicions. Yet, it may set the tone for a pragmatic arrangement: cooperation where necessary, competition where inevitable.

The question remains whether this cautious tango between the elephant and the dragon will lead to lasting change—or simply a temporary alignment born of economic necessity.

‍