By Eric Vandenbroeck and co-workers

U.S. Policy Is Forcing New Delhi to Turn to Its Rival

In August, five years after a fatal military clash between China and India, Indian Prime Minister Narendra Modi traveled to Tianjin to meet with Chinese leader Xi Jinping at the Shanghai Cooperation Organization summit. The visit marked Modi’s first trip to China since relations between the Asian neighbors soured in 2020. Western analysts were struck by images of Modi holding hands and laughing with Xi and Russian President Vladimir Putin. Several observers feared that U.S. President Donald Trump’s tirades and tariffs—he imposed a 50 percent tariff rate on India over the summer—had pushed New Delhi into Beijing’s arms.

That assertion gets both cause and effect wrong. Modi’s meeting with Xi was neither a sudden response to Trump’s bullying nor a hurried reset of India’s relationship with China. And New Delhi is certainly not in Beijing’s arms, nor is it striving alongside Beijing and Moscow to establish a new anti-Western order. India has indeed been working with China for nearly a year to return some measure of stability to bilateral relations. Those efforts, however, don’t obviate the fact that the rivalry between the two Asian giants persists.

But Trump’s pressure on India and his seeming desire to arrive at some kind of grand bargain with China will invariably affect the calculus of Indian policymakers. With concern, they will see Washington’s coercive approach toward New Delhi and the contrasting gentler posture toward Beijing as a break from recent U.S. policy, which stressed the imperative of deterring China and helped drive the United States and India closer. Indian officials will not want to be left at such a disadvantage, and that alarm could increase the extent of India’s reengagement with China. That, in turn, will have implications for American interests in the region. If Trump continues to target India, it could lead to a situation in which India opts to cooperate less with and buy less from the United States and to potentially do more with China and others—the opposite of the Trump administration’s stated desire to strengthen ties with New Delhi.

 

Courting A Rival

The thaw in what had been an icy Chinese-Indian relationship was first evident in October 2024 at the convening of the non-Western grouping known as BRICS, when Modi and Xi had a bilateral meeting for the first time since 2019. The two sides announced that they had completed troop disengagement at the border, a key step on the path to normalizing relations. Both Beijing and New Delhi were ready to change the temperature. China had been facing strategic and economic headwinds, including flagging growth, pressure from the United States, and concern in Europe about Chinese support for Russia. India, for its part, did not want to fret about the prospect of further clashes along the border and instead wanted to focus on boosting its economic growth and bolstering Indian capabilities for the larger competition with China. And at the time, neither side knew who would next occupy the White House and how it might affect U.S. policy toward China.

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Since then, the frost between China and India has melted further. The countries revived border talks among their special representatives in December 2024, with Chinese Foreign Minister Wang Yi traveling to New Delhi this August. On the multilateral front, despite Xi skipping the G-20 summit in India in 2023, India sent several senior officials, including its defense minister, external affairs minister, and national security adviser, to China for various meetings this year in support of Beijing’s presidency of the Shanghai Cooperation Organization.

These consultations have opened the door to additional conciliatory steps, including the revival of civil society exchanges, an agreement to restart direct flights between the two countries, India once again issuing visas for Chinese tourists, and China restoring access for Indians to the pilgrimage to Kailash Mansarovar, a sacred Hindu site in Chinese-held Tibet.

Perhaps more significant is the possibility of selective economic reengagement. In 2020, concerns related to the COVID-19 pandemic and that year’s border clashes led New Delhi to impose restrictions on Chinese economic and technology-related activities in India. These included additional scrutiny of investments from China, the exclusion of Chinese companies from India’s 5G network, and the banning of Chinese apps such as TikTok. In the last couple of years, Indian firms, including some of the country’s largest conglomerates, have been calling for these restrictions to be eased. With the current thaw, the Indian government seems more receptive to this demand—and Trump’s tariffs could tip the scale in favor of those seeking to do more business with China.

If the situation along the border remains stable, New Delhi could ease some restrictions in nonsensitive areas. It would likely prioritize sectors where Chinese companies, industrial inputs, and expertise could help India grow or, ironically, help reduce its dependence on imports from China over the long term by building domestic capacity. Policymakers could permit Chinese involvement in areas where it could help create jobs, improve India’s manufacturing and technological capabilities, better integrate India into global supply chains, and boost Indian exports. New Delhi could condition this market access by requiring those Chinese companies seeking to do business in India to form a joint venture with a local company or provide technical assistance or to transfer technology to their Indian counterparts (much as Beijing has required of foreign firms seeking to do business in China). To be sure, India will likely continue to exclude Chinese entities from sensitive sectors, including critical physical and digital infrastructure such as telecommunications, strategic technologies such as space and nuclear energy, and those that would allow China to own or transfer vast quantities of data relating to Indian citizens.

There is a dilemma here for both countries. For New Delhi, repairing economic ties with China could contribute to economic growth but also lead to greater vulnerability and dependence. Beijing, for its part, wants access to the largest market in the global South as it seeks to diversify away from Western markets. But in the process, it could end up strengthening a strategic and economic competitor.

Trump and Indian Prime Minister Narendra Modi at the White House, Washington, D.C., February 2025

 

At Arm’s Length

This dilemma reflects the fact that, whatever they might say at summits, the two countries still see each other as rivals. And their differences persist. The Indian chief of defense staff recently reiterated that the unresolved border dispute with China remains India’s primary security challenge. Chinese and Indian troops have not gone back to their pre-2020 deployments. Beijing still wants to keep the border issue separate from the broader relationship, whereas New Delhi sees a stable border as the necessary basis for normal ties.

Other bilateral and regional problems also bedevil the relationship. India’s trade deficit with China has only increased in the last few years. And Beijing has demonstrated that it is willing to weaponize New Delhi’s dependence and to try to stymie India’s manufacturing and infrastructure ambitions: China restricted the export to India of rare-earth magnets and fertilizers in 2024 and 2025, the supply to India of tunnel-boring machines produced by a German company in a Chinese manufacturing facility, and the travel of technical experts from China to Apple’s partner factories in India. It has also announced a massive dam project on the Yarlung Tsangpo that could adversely affect India and Bangladesh, which are downstream.

This year, in May, China also played a significant, albeit behind-the-scenes, role in major clashes between India and Pakistan. Beijing backed Islamabad with real-time intelligence and information operations; one former Indian ambassador to Beijing labeled China’s support “battlefield collusion.” China also continues to be Pakistan’s most consequential supplier of military equipment, including, most recently, another submarine.

Thanks to these developments and to India’s long-simmering mistrust of China, New Delhi has not been as warm or as willing to accommodate China as Chinese officials might have hoped. Ahead of the Modi-Xi meeting, India declined to confirm China’s claim that Indian External Affairs Minister S. Jaishankar affirmed to Wang Yi during their August meeting that “Taiwan is part of China.” Instead, Indian officials insisted that they would maintain economic, technological, and cultural ties with Taiwan. An upset Beijing then declared this an attempt to “undermine China’s sovereignty on the Taiwan question and impede the improvement of China-India relations.” During the visit of Philippine President Ferdinand “Bongbong” Marcos, Jr., in early August and Modi’s subsequent trip to Tokyo in late August, India also did not hold back in reiterating its position on the South China Sea and East China Sea, where Chinese maritime claims and military maneuvers have rankled neighboring states. Both of those diplomatic exchanges—and the first joint sail in the South China Sea by the Indian and Philippine navies—also indicate that India continues to seek to balance China by strengthening ties with other states in East Asia and Southeast Asia.

India has also been reluctant to support or join Chinese efforts to build an anti-Western bloc. Modi’s attendance at the Shanghai Cooperation Organization summit received considerable attention, but what he did not do drew less attention. He pointedly did not revive his trilateral meetings with the leaders of China and Russia, which were held regularly before 2019, despite Beijing and Moscow’s desire to do so. He did not attend Xi’s victory parade in Beijing. And he did not, unlike Xi and Putin, participate in Brazil’s emergency virtual BRICS summit to discuss U.S. tariffs, leaving that task to S. Jaishankar.

 

The Trump Effect

India has little desire to cede ground or make substantial concessions to China. Two elements of Trump’s approach, however, are shaping the debate in India about the right balance in the country’s foreign relations—and could very well shape India’s choices. First, Trump is bluntly using the very partnership that previous administrations—including his own—have built as coercive leverage to pressure India to change both foreign and economic policy. Second, he has taken a more accommodating stance toward Xi and caused a great deal of uncertainty in India about the direction of U.S.-Chinese relations.

India moved to stabilize ties with China in 2024 in part because it did not know in which direction the next U.S. president would take the country’s China policy. The Trump administration’s tariffs against India—and the prospect of a Trump-Xi summit—only increased that impetus and the urgency as Modi headed into talks with Xi in Tianjin. But with Washington pressuring New Delhi and holding back on countering China, Modi found himself in a weaker position than he was in last year, when the Biden administration maintained a clear interest in partnering with India, in part to compete with China.

A U.S.-Chinese détente, even if temporary, would not only change the balance of leverage between India and China in negotiations but also complicate India’s strategic environment. If the current chill in India’s relations with the United States persists, India will face a scenario it has not experienced for a while: a fractious relationship with the United States while Washington pulls back from full-on strategic competition with Beijing and draws closer to Islamabad. Even though India is much stronger today than it was in the past, it fears that in such a scenario China would be tempted to press India harder—for instance, by attempting further incursions at the border. To avert that, there will be calls in India to hedge further with China even if it’s on suboptimal terms, such as by making certain economic concessions, holding back on cooperation with other partners that China might find threatening, or not standing up to instances of Chinese assertiveness along the border.

This is not just a hypothetical future concern. Trump’s approaches to China and India have already strengthened the hands of those in India making the case for greater openness to China. India’s largest corporations, for instance, are exploring joint ventures with Chinese companies and seeking more imports from China. Beyond the medium-to-long-term impact on who does business with India, such activity could eventually expand the constituencies in India that want greater accommodation with China.

At the same time, Trump is weakening the hands of those in India who advocate for closer ties to the United States. New Delhi’s and Washington’s shared interests in countering Beijing deepened their partnership. It incentivized both countries to overcome historical baggage, manage differences, and cooperate in unprecedented ways in terms of defense, economic security, and technology.

But today, critics of that cooperation in India are arguing that Trump does not seem interested in competition with China. Moreover, those critics argue, a United States that is weaponizing interdependence and trying to coerce India is behaving, well, just like China. Even supporters of the relationship, such as Jaishankar, note that India needs to guard against not just overdependence on sources of supply (notably, China) but also against sources of demand (notably, the United States). This reflects a shift: instead of being understood as part of the solution to India’s China problem, the United States is fast becoming perceived as a problem in its own right.

 

A Lose-Lose Situation

And if that perception holds—and policies follow from it—it will be a problem for the United States. Persisting tensions with the United States will affect India’s strategic, economic, and technology choices. Figures both within and outside the Indian government will urge leaders to do less with an unreliable United States and to find alternative security partners and markets, as well as sources of capital, defense equipment, technology, commodities, and know-how. This will make India a less friendly environment for American businesses and technology firms and a less willing partner for the U.S. government, particularly in the defense, economic security, and technology domains, where India had started cooperating with the United States in ways it had not before.

The American investment in India was not based on altruism but on interests, including the U.S. ability to compete with and deter China. If India were aligned with the United States, it would complicate China’s calculations. If India and the United States are at odds with each other, though, both countries would have a weaker hand to play, especially when it comes to China.

New Delhi realizes that it will have less leverage with Beijing and a tougher time securing itself, growing economically, innovating, and ensuring an Asia not dominated by China if U.S.-Indian ties remain fraught. This is why it continues to seek an agreement with the Trump administration. If Washington does not reciprocate and instead persists in pressuring India, however, New Delhi over time will find a different balance in its foreign policy, and that new balance will invariably be less favorable to the United States.

 

 

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