Delhi has decided to ease the investment restrictions imposed by China on the Indian economy. This step aims to restore ties with Beijing and end six years of dispute, led by Prime Minister Narendra Modi.
Amid war in the Middle East, India and China are trying to normalize relations. In Asia, the two nuclear-armed countries—China and India—experienced border tensions in 2020. After the clash between border guards of the two countries, Delhi decided to restrict political and economic ties with Beijing. Additionally, Delhi imposed limits on Chinese investments in India and froze various joint projects. Citing national security concerns, India banned the operations of 59 Chinese technology companies, including TikTok. Delhi also rejected a $1 billion investment proposal from BYD, China’s giant automobile manufacturer.
Nevertheless, in 2024, India and China agreed to jointly patrol their disputed borders to end four years of military confrontation. This was important to prevent further clashes in the mountainous border areas.
One year after this decision, Indian Prime Minister Narendra Modi visited China after a seven-year break. As a result, direct flights between India and China were restored after a five-year hiatus.
The rapprochement between India and China occurred against the backdrop of the USA and Israel continuing the war against Iran. Both China and India suffer from this war. Both countries had investment plans in Iran. Furthermore, Iran’s maintaining the Strait of Hormuz under fire has limited China’s and India’s access to energy resources from the Gulf countries. In this situation, Beijing and Delhi decided to expand their economic ties.
Elkhan Shahinoglu,
political analyst