Since 2026, a series of gestures by India aimed at improving economic and trade relations with China has drawn significant attention. From easing some investment norms for the first time in six years - specifically by placing companies with less than 10 percent Chinese equity under the automatic approval route - to the rejection of 41.5 percent of anti-dumping recommendations against Chinese goods, and further to the resumption of border trade at Nathu La Pass, India is signaling goodwill toward China through a succession of pragmatic policies.

This pragmatic shift is the result of a combination of economic realities, geopolitical changes and domestic demand; it is also a rational choice India has made, compelled by its actual circumstances.

In recent years, India devoted significant effort to promoting "Self-reliant India" and "Make in India," attempting to reduce or even eliminate its dependence on Chinese supply chains by erecting investment barriers against China, imposing tariffs, intensifying anti-dumping investigations and cracking down on Chinese-funded enterprises operating in the country. However, after several years of implementation, the actual results of this strategy have diverged sharply from expectations.

Official Chinese statistics show that bilateral trade between China and India reached $155 billion in 2025, setting a new record with a year-on-year increase of more than 12 percent, while China has long maintained its position as India's largest trading partner. Paradoxically, the more India vigorously promotes the development of its domestic manufacturing sector, the deeper its reliance on Chinese intermediate goods and supply chains becomes.

At the same time, shifts in the external strategic environment are further driving India to change course. In recent years, India and the US have frequently clashed over issues such as tariffs, trade rules and geopolitics; the high level of uncertainty stemming from the US government's transactional diplomacy has dispelled the notion held by some in New Delhi that they could leverage the US to counter China for their own gain.

New Delhi may finally be realizing that persisting with trade and economic barriers against China will neither secure industrial upgrading nor yield greater external dividends; instead, it risks relegating India to the sidelines in the global race for production capacity. Furthermore, as the Indian economy faces growth pressures and public concern over livelihood issues such as employment and income intensifies, the government needs more pragmatic policies to address the people's demands.

This round of India's pragmatic shift paves the way for new growth opportunities in China-India economic and trade relations. The most immediate benefit is the full realization of the long-standing complementary strengths in their supply chains. Chinese brands already command approximately 33 percent of India's electric vehicle market; as policies such as exemptions for power equipment tenders and the easing of investment approval processes take effect, cooperation potential in sectors like new energy, electronics manufacturing and biomedicine is poised to translate into actual production capacity.

This will not only help India address gaps in its manufacturing sector but also enable China's mature industrial chains to access a broader market for application.

It must also be acknowledged that voices of suspicion regarding China persist within India; in particular, domestic protectionist forces and traditional local manufacturing groups continue to lobby the Modi administration to impose restrictions on China out of their own self-interest, and the "ceiling" on investment approvals remains in place. Issues such as trade imbalances and industrial competition are unlikely to be fully resolved in the short term.

As the world's two most populous emerging economies, both China and India require a stable neighborhood for their respective modernization processes; leveraging each other's strengths is far better than mutual attrition. As long as both sides remain committed to solidifying the foundation of shared interests through practical cooperation and resolving differences through dialogue and consultation, they can - by moving toward each other and engaging in benign interaction - gradually find a new model of coexistence for two neighboring major powers.