Despite historical border tensions, the Modi-Xi meeting signals a pragmatic shift to deepen bilateral economic ties. Both leaders talked peace and mutual respect, with an emphasis on cooperative development rather than rivalry. This detente offers key opportunities for India’s manufacturing sector, particularly as it pursues its ambitious Make in India and Production Linked Incentive (PLI) campaigns aimed at transforming the country into a global manufacturing hub.

China’s dominance in manufacturing and supply chains remains critical for India’s ambitions. India relies on Chinese components, machinery, and technology as it integrates into global supply chains, acknowledging that short- and medium-term cooperation is essential despite geopolitical friction.

The “China Plus One" diversification strategy, previously favoured by western corporations to reduce dependence on China, is evolving into an “India Plus Two" scenario where India takes centre stage alongside China and Russia, leveraging their combined strengths. This shift promises enhanced trade and investment flows, especially as both countries move to reduce visa restrictions and aviation connectivity resumes, easing people and goods movement.

The renewed focus on technology and research cooperation, including joint ventures in electronics and eased foreign direct investment norms, offers India access to advanced knowledge and capital. However, challenges remain, such as China’s export restrictions on critical machinery and rare earths that India needs for industrial growth. Nonetheless, the Modi-Xi engagement sets the stage for gradual improvements in these areas, catalysing India’s manufacturing, and technological advancement.

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