They have now met in Kazan, in Tianjin and last month in New Delhi as part of the BRICS summit; Xi's first visit to India in seven years. Business visas are being issued within approximately four weeks, direct flights have resumed and now following the talks in Beijing in August, the two armies have two new hotlines. This is a relatively warm season by the last six years' standards.

The trade figures don't tell the same story. India purchased $116 billion worth of goods from China in 2025, while China sold it $101 billion worth of goods to India in the same year, with the difference reaching as much as $91 billion by August of this year, with 2026 likely to see another record. Customs data indicate the value of China's exports to India surged 21.8 per cent in the first half to $79.41 billion. India exported 37.2 per cent more to China, which is from a low base of $12.31 billion. A small number that grows quickly isn't a big number.

India's purchases are more important than the sheer volume. The import bill is led by electrical and electronic equipment, machinery and chemicals most of which is not intended for customers. They are the components, tools and resources that Indian factories require for their operation. According to industry estimates, the Chinese supplier contribution to India's electronics industry is between half and two-thirds of the components.

India's biggest export success of the last five years, the smartphone remains at just 18-20 per cent local content. All the components used in the handsets shipped to Europe and America are first brought into the country from China. When Indian exports to China rose by about 40 per cent in the April-August period, it was not an indication of a shift in a relationship, but of a larger assembly line running on imported parts.

The reason for this is the scale gap. According to the figures of the World Bank, the share of manufacturing value added in the world is 28 per cent for China and 3 per cent for India in 2025. The difference in merchandise exports is 16.3 per cent in comparison to 1.7 per cent.

There isn't a slogan like import substitution that can close a gap in a couple of years of budget cycles. India is part of the culprit, as the nation allocates just 0.64 per cent of GDP towards research and development, which is significantly less than its Asian counterparts, and skilled workers are still in short supply.

Beijing is aware of the leverage this provides it and has exploited it. In April 2025, Chinese authorities restricted exports of rare earth magnets, leading Indian auto manufacturers and electronic component manufacturers to fear disruption. Fertilizer deliveries were blocked for almost a full growing season from an ally which had provided nearly 30 per cent of India's requirement, and tunnel-boring machines for infrastructure work were just waiting. During his visit to Delhi in August 2025, Wang Yi promised relief, and by October, some Indian firms had been given magnet licences. However, a license that is granted can be revoked. That's what Delhi's planners are constantly reminded of: dependence works as long as the supplier is friendly.

The response from New Delhi is to open the door but carefully. The government relaxed Press Note 3, the rule for 2020, which had required all Chinese money to go through a security review, in March. There is an automatic route for non-controlling interest up to 10 per cent to come in and proposals in electronics components, capital goods, solar cells, battery parts and rare earth processing get a decision in 60 days subject to an India majority holding in the joint venture.

But officials made quick to add that the restrictions on Chinese companies themselves remain. The reasoning is quite straightforward. Note that Chinese direct investment in India amounted to merely $2.51 billion from 2000 through Dec. 2025, or 0.32 per cent of total FDI, whereas Chinese goods flowed in by the shipload. Capital was shut out and merchandise was not. The ties up of Dixon Technologies with Longcheer and HKC suggest that a balanced model is being worked out, with Chinese technology, Indian equity and locally produced products. In the process of being too careful in implementing the visa squeeze, the Observer Research Foundation estimated the lost production by Indian electronics makers at $15 billion over four years.

This is a good risk to take. The tariffs imposed by Washington on both capitals brought them closer, but the piece in The Diplomat makes sense that this merely accelerated a thaw that had begun. Two-way trade last year was at or near a record of $150 billion to $155 billion, depending on the accountant. The pragmatist interpretation, which can't be disputed, is that India should use the warming window to absorb Chinese know-how and investment in India while it has the time to develop the base of components, and once the next border flare up or export ban is imposed, it can once again shut the window.

The naysayers have reasons to be right. The LOC is the real line of demarcation and the 2020 confrontation saw 20 Indian and four Chinese soldiers killed. Chinese companies are afraid of a market which scrutinizes them so closely. Late last year, Singapore's ISAS had written that the thaw had calmed the border while not resulting in a reset. If the real technology is ‘channeled’ to the Chinese partner, it is just another exchange that would make both countries dependent on each other something Indian policy makers have also stated openly they do not want.