The current trajectory of India-China relations reflects a profound transformation in New Delhi’s strategic posture. What was once pitched to the Indian public and the international community as the rise of a peer competitor to Beijing has increasingly settled into a relationship defined by accommodation and structural dependence. This shift is the culmination of a decade of policy choices characterised by a persistent gap between ambitious rhetoric and the underlying realities of domestic capacity. They are rooted in the erosion of India’s economic strength and a lack of clear strategic direction under Prime Minister Narendra Modi.
The normalisation of ties, acceded to at the meeting between Modi and Xi Jinping in 2024, has prioritised a fragile tactical calm over a long-term, strategic design. India and China have resumed high-level diplomatic exchanges, reopened trade routes, and moved towards a restoration of pre-2020 economic engagement. This rapprochement has come at a tangible cost to India’s credibility. Beijing continues its assertive behaviour along the disputed border with regular renaming of locations claimed by India. These actions signal a refusal to recognise Indian sovereignty and territorial integrity, yet New Delhi’s response has remained perfunctory. The Modi government is so reluctant to annoy China that it has refused to approve a Hindi film on the 2020 Galwan clash when 20 Indian soldiers died at the hands of their Chinese counterparts. The Salman Khan starrer has been renamed, with more than 40% of the film being reshot to create a fictional tale. This shaping of the domestic information environment is to ensure facts do not complicate the broader diplomatic reset that the Modi government seeks.
The economic reality of this relationship is even more striking. Despite a decade of political slogans championing self-reliance and the necessity of decoupling from Chinese supply chains, the bilateral trade volume has hit record levels. In 2025, trade between the two nations reached $155.6 billion, with the trade deficit a record $99.2 billion, a figure that highlights India’s deepening structural economic dependency on China. The government has, in recent months, signalled an openness to easing investment norms that were previously placed under strict scrutiny in April 2020 during the pandemic. By inviting Chinese technicians and investors back into the country, New Delhi is effectively acknowledging that it needs Chinese support to run its industries. The result is a strategic environment where the economic incentives for cooperation far outweigh the geopolitical rationale for competition.
This dependency is not limited to capital but is deeply embedded in the supply chains of India’s most critical sectors. The pharmaceutical industry requires Chinese active pharmaceutical ingredients to produce generic drugs. The solar energy sector is almost entirely dependent on Chinese cells and modules. The emerging electric vehicles industry cannot function without Chinese battery technology and processed minerals. By failing to localise the production of these technologies, India has effectively outsourced its energy transition and healthcare security to its strategic challenger. This structural vulnerability ensures that any attempt at aggressive geopolitical posturing is easily checked by the threat of supply chain disruption.
India’s share of global manufacturing has remained stagnant at approximately 2.8% for a decade, while China has maintained a share of around 30%. The production linked incentive schemes launched by the Modi government have primarily attracted assembly operations rather than high-value manufacturing. These assembly units remain dependent on the import of components from Chinese factories. This creates a circular dependency where increased Indian exports of products like iPhones lead to increased Chinese imports. India is thus not replacing China in the global supply chain but is merely acting as a final assembly point for Chinese goods, with heavy subsidies provided by the Indian taxpayer.
India consequently remains a secondary participant in global value chains, largely focused on low-end assembly rather than high-end technological innovation. As the world moves towards an era of heightened technological competition, this focus on the low-value end of the spectrum is a recipe for long-term decline. Modi has failed to build the indigenous base in India required to compete with Chinese innovation, choosing instead to remain a consumer of technology that is ultimately controlled by Beijing.
It means that the official narrative of India as a rising power is now increasingly disconnected from the reality of a country that is progressively more reliant on the very power it seeks to constrain. India’s role as a reliable balancer against Chinese hegemony in the Indo-Pacific, that so many countries sought New Delhi out for, is eroding because it cannot sustain a posture of competition while remaining economically tethered to Beijing. The regional consequences of India’s concessions are profound. As New Delhi recalibrates its foreign policy to accommodate Beijing’s rise, other countries are observing this pivot. They are adjusting their own diplomatic strategies to align with the reality that India is no longer an aspiring peer competitor.
While the geopolitical calculations of the Donald Trump administration have certainly played a role, India’s transition toward this subordinate position to China is largely a result of internal weaknesses that have exacerbated as Modi has prioritised domestic political optics over the gruelling, long-term work of State building. This approach has left the economy exposed and the military with a strategically constrained set of options. When national interest is defined by one man’s political necessity of the moment rather than a calculated, multi-generational strategy, the outcome is a slow drift towards submission.
Sadly, the era of post-Independence Indian exceptionalism in foreign policy has now been replaced by a subservient accommodation of Chinese dominance. For a country with India’s ambitions, this is a profound strategic miscalculation that will shape the regional balance of power for years to come. The opportunity to position India as a distinct, competitive power with global influence is fast slipping, replaced by the reality of a country that can barely manage a decline in influence while maintaining a veneer of strength. India has reached a point where it must decide if it is truly prepared to undertake the immense and painstaking effort required to be a great power, or if it has tacitly accepted the future of a secondary player in an order managed by others. The evidence suggests that, for now, the choice has already been made.
Sushant Singh is lecturer at Yale University