In a significant strategic shift, the Indian government is actively considering a carefully calibrated, or "graded," opening of its economy to China. This move, discussed at the highest levels, is not a sweeping reversal but a potential incremental easing of restrictions, heavily contingent on reciprocal actions from Beijing. The development comes against the backdrop of a rapidly changing global trade landscape and the looming spectre of heightened US tariffs.
Reciprocity: The Core Condition for Any Thaw
The cornerstone of India's contemplated approach is strict reciprocity. Officials have made it clear that any relaxation of norms for Chinese investments and businesses will be directly linked to Beijing easing its own restrictions on Indian exports and services. Key areas where India seeks concessions include sectors like rare earth magnets.
An official privy to the deliberations stated, "It is being worked upon. It will take time though. There has to be reciprocity." The official pointed to earlier steps like the restoration of flights and easing of visa and entry norms for Chinese technicians working on stalled projects as examples of this gradual, give-and-take process.
The Backdrop: From Chill to Pragmatic Rebalancing
This potential warming of economic ties marks a practical rebalancing of India's foreign policy and trade options. It follows a noticeable chill in India-US relations and acknowledges the complex realities of global supply chains. Despite the ongoing military stand-off along the Line of Actual Control (LAC), both nations have addressed some "low-hanging fruit" to stabilise the broader relationship.
Parallel diplomatic efforts last year yielded agreements on several confidence-building measures, including the resumption of the Kailash Mansarovar Yatra, restoration of direct flights, and the sharing of trans-border river data. India had described these as "people-centric steps" aimed at stabilising ties.
Industry Pressure and Incremental Steps Already Taken
Substantial groundwork for this shift has been laid. A high-level committee chaired by NITI Aayog member Rajiv Gauba had previously recommended withdrawing curbs on Chinese investments. The Economic Survey 2023-24 also argued for attracting investment from Chinese firms to bolster India's export competitiveness.
Industry bodies have been vocal about the operational hurdles caused by stringent restrictions. They warned that prolonged delays in visa approvals were crippling manufacturing, especially for plants reliant on imported Chinese machinery. The dependence on China for key components in electrical and electronics makes the presence of Chinese technical personnel critical, particularly to meet export commitments under schemes like the Production Linked Incentive (PLI).
Responding to this pressure, India has already taken several incremental steps:
- Resumed issuing tourist visas to Chinese nationals.
- Eased entry norms for skilled Chinese workers.
- Made operational a dedicated portal to fast-track short-term business visas for Chinese technicians crucial for PLI projects.
- The Department for Promotion of Industry and Internal Trade (DPIIT) allowed Indian companies to generate sponsorship letters for foreign professionals under the e-B-4 visa framework.
The stark disparity in visa issuances highlights the imbalance: while Indian visas to Chinese nationals plummeted from around 2 lakh in 2019 to a few thousand in 2024, the Chinese Embassy in Delhi issued over 1.8 lakh visas to Indian citizens in 2023 and more than 85,000 in the first quarter of 2025.
The Path Forward: Calibrated and Cautious
The current restrictions on Chinese investments were imposed via Press Note 3 in April 2020, mandating government approval for investments from countries sharing a land border with India. Initially aimed at preventing opportunistic takeovers during the Covid-19 pandemic, the policy was sustained after the Galwan clash in 2020 due to heightened national security concerns.
The discussions now signal a nuanced, pragmatic evolution of that policy. The government is examining whether some of these investment-related restrictions could be relaxed in a phased manner. The final shape of any easing will depend on the tangible reciprocity offered by Beijing, making the next few months critical for the direction of India-China economic engagement.
