An influential member of Prime Minister Narendra Modi's Economic Advisory Council is pushing India to fundamentally recalibrate its economic relationship with China, signalling a potential shift in New Delhi's approach toward its neighbour after years of heightened tensions. Rakesh Mohan, speaking Thursday, contended that India should actively court Chinese manufacturers and capital rather than maintain the protective barriers erected following the 2020 border conflict, arguing that such engagement would generate employment and strengthen export competitiveness across multiple sectors.
Mohan's intervention represents a notable departure from New Delhi's recent posture, which has been defined by investment scrutiny and strategic caution following deadly clashes along the Himalayan frontier. The remarks gain significance precisely because they emanate from within the Modi administration itself, suggesting that at least some policymakers recognise the limitations of the containment approach adopted after 2020 and see merit in pragmatic economic cooperation despite underlying geopolitical tensions.
The adviser specifically identified labour-intensive manufacturing domains where Indian and Chinese interests could align productively. Textiles, garments, footwear and furniture represent sectors where China possesses capital and technology whilst India offers abundant low-cost labour—a complementarity that could theoretically benefit both economies. Mohan emphasised that New Delhi must conduct granular analysis of Chinese import patterns to identify specific product categories where Indian manufacturers could realistically compete and potentially displace some Chinese suppliers through joint ventures or foreign investment.
Crucially, Mohan's position reflects a pragmatic assessment of India's current trade imbalance with China. With Indian imports from China exceeding $130 billion annually in the fiscal year ending March, Mohan contends that avoidance is neither feasible nor optimal. Rather than accepting this asymmetry passively, he advocates that New Delhi channel Chinese capital into productive sectors that could generate counter-exports, gradually rebalancing the relationship through deeper commercial integration rather than isolation.
The timing of these comments proves instructive, arriving as the United States under President Trump implements tariff regimes that have created uncertainty about Washington's reliability as a long-term economic partner. Mohan explicitly framed the rationale in these terms, arguing that Indian policymakers cannot assume consistent American support for trade liberalisation given shifting protectionist impulses. This calculation fundamentally underpins his argument for recalibrating China strategy—not out of preference for Beijing over Washington, but from recognition that both relationships merit simultaneous cultivation in an unstable global environment.
Mohan's recommendations extend beyond investment attraction to encompass institutional changes that would facilitate deeper engagement. He called for expanded business visas, increased academic collaboration, restoration of direct aviation routes, and easing of travel restrictions that currently constrain people-to-people connections. These measures would create the interpersonal and logistical infrastructure supporting sustained economic cooperation, moving beyond episodic transactions toward systemic integration.
Particularly striking is Mohan's explicit call for India to reconsider its 2019 decision to remain outside the China-backed Regional Comprehensive Economic Partnership. RCEP exclusion reflected concerns that Chinese goods would overwhelm domestic producers and threaten Indian farmers, anxieties that retain political salience. However, Mohan argues that non-participation isolates India from the supply chain dynamics that will shape Asian prosperity over the coming decade, ultimately disadvantaging Indian exporters relative to competitors already embedded in RCEP frameworks. He further urged India to pursue membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, suggesting that simultaneous engagement with multiple regional blocs would optimally position Indian manufacturers.
This dual-bloc strategy reflects sophisticated thinking about integration mechanics. By joining both Chinese-centric and broader Indo-Pacific frameworks, India could access capital and components from China whilst maintaining Western market access, theoretically capturing benefits from multiple supply chain configurations. Mohan framed this as essential for transforming India's role from peripheral participant to integrated actor within Asian manufacturing networks that increasingly determine export competitiveness.
The relationship between India and China remains profoundly complicated by history, geography and strategic competition. The 1962 war casts long shadows, and recurring military standoffs along the disputed Himalayan frontier periodically threaten civilian relations. Yet recent months have witnessed tentative signals of normalisation—restoration of direct flights, resumption of business visas, and selective approvals for Chinese investments in electronics and other sectors. These developments suggest that despite underlying tensions, both governments recognise mutual benefits from managed economic cooperation.
Mohan's emphasis on economic security alongside national security acknowledges this delicate balance. He explicitly rejected the notion that economic engagement requires abandoning strategic vigilance, instead advocating calculated openness that maintains protective mechanisms while pursuing beneficial commercial interaction. This formulation attempts to bridge the ideological divide between those viewing China purely through a security lens and those emphasising economic pragmatism.
For Southeast Asian observers, Mohan's intervention carries implications extending beyond bilateral India-China dynamics. Indian integration into Asian supply chains would create fresh competition for regional manufacturers whilst potentially generating new markets for Southeast Asian inputs. Malaysia, Vietnam, Thailand and other regional economies benefit from China's dominance as manufacturing hub, but they also depend on Indian market access and investment. Deeper India-China integration could reorder these calculations, creating both opportunities and disruptions across the region.
The adviser's framing also reflects broader recognition that rigid geopolitical blocs prove economically inefficient. Rather than choosing between Washington and Beijing, Mohan suggests India should simultaneously cultivate relationships with both, treating economic engagement as distinct from (though related to) strategic positioning. This pragmatic approach challenges the zero-sum frameworks that have dominated recent Indian foreign policy discourse, potentially signalling intellectual shifts within the Modi administration regarding how to balance competing interests in an interconnected global economy.
