Introduction

India’s China policy scored a success when, on 21 October 2024, the two countries agreed on patrolling arrangements that would lead to a disengagement of their forces in the Depsang Bulge and the Charding-Ninglung Nala junction near Demchok^[1]—the last two of the six areas on the Line of Actual Control (LAC) in eastern Ladakh that had been blockaded by China’s People’s Liberation Army (PLA) in March and April 2020. While the two sides had worked out agreements to deal with four of the areas earlier, there had been a deadlock over these two since mid-2022.

India had responded to the March-April 2020 Chinese blockades and troop deployments by an equivalent mobilisation. Instead of a military option, however, it chose the path of economic sanctions and diplomatic efforts to persuade Beijing to step back. Through word and deed, it made clear to China that business-as-usual was not possible until the border situation was resolved. After four years of negotiations, China finally agreed to lift its blockade in the last two areas. This has set the stage for a de-escalation of forces on both sides of the LAC and the restoration of normalcy in Sino-Indian ties.

This paper examines the way India dealt with the situation and, with a combination of military firmness and diplomacy, succeeded in limiting the adverse fallout of the Chinese actions. It has since held further negotiations to restore status quo ante as of March 2020 on the LAC. India has also eased restrictions on Chinese investments and trade that could lead to full normalisation of ties between the two countries.

Speaking at the Chanakya Defence Dialogue in Delhi on 1 October 2024, the Indian Army Chief, General Upendra Dwivedi, characterised the ongoing border tension between India and China as “not normal.”^[2] He said that trust had become the “biggest casualty” of the situation arising from the 2020 Chinese actions, adding astutely that “with China you have to compete, cooperate, co-exist, confront and contest,” thereby outlining the dimensions of what is a challenge not just for India, but for the rest of the world as well: managing China.

The United States (US) has demonstrated its capacity to both pressure and dissuade Beijing, as well as to woo it with inducements. For some time, it shut down China’s access to western high technology, along with denying or restricting western markets to Chinese tech giants such as Huawei and various electrical vehicle (EV) manufacturers. Most analysts are of the view that China now has sufficient scientific-technical momentum to maintain its course despite such barriers, but there is also little doubt that the country’s lucrative trade with the West is an important element in its economic outlook, and western restrictions do slow it down.^[3]

India’s situation is unique. In terms of Gross Domestic Product (GDP), in the 1980s and 1990s, India and China were roughly equal and both were keen to maintain an even keel in their political relationship. This was manifested in a series of agreements between them in 1993, 1996, 2003, 2005 and 2012, to not just maintain peace and tranquillity on the LAC, but to actually take incremental steps to resolve their border problem. These agreements promoted direct military-to-military communications and helped keep peace.^[4]

As China moved up in global economic rankings, especially after the global financial crisis of 2008-09, the dynamics of the relationship changed. Beijing became more assertive along the LAC and disinclined to settle the border issue. Within a decade, it began to mark its presence in the Indian Ocean region as well. The 2020 crisis was a culmination of a process by which Beijing sought to awe India. The Indian response has been at two levels. One was to match China’s military posture along the LAC with sufficient deterrence capacity. The other was to start constructing, beginning in the mid-2000s, more roads in Ladakh and Arunachal Pradesh, and reviving defunct landing grounds.

In the late 2000s, India raised two new divisions of the Army to service the Sino-Indian border.^[5] The Indian Air Force also strengthened its capabilities by shifting frontline fighters to the east to deal with the Chinese challenge.^[6] Subsequently, the government established a new mountain strike corps, indicating that India was looking beyond a merely defensive posture against China.^[7] Much of this was reflected in the changed official Operational Directive to the armed forces, directing it to be prepared to meet a two-front challenge to Indian security, involving both China and Pakistan.

Chinese activity along the LAC too, increased in this period. This was deliberate policy. In talks with India, China sought a freeze on India’s border construction, but New Delhi rejected the demand. This led to more sustained incursions across the LAC in Depsang in April-May 2013 and Chumar in September 2014.  The Chumar incident indicated the extent to which these incursions were woven into Chinese policy: the standoff, when the PLA tried to build a road on the Indian side of the LAC, starting on the eve of President Xi Jinping’s first visit to India, carried on through the visit, despite being brought to his attention.

Eastern Ladakh 2020: Diplomacy and Force

In April 2020, China came up with another variant of incursions. Even as Covid-19 was sweeping through the world, the PLA blockaded six points on the LAC^[a] where Indian and Chinese claims overlapped. Until then, as per agreement and practice, both sides had been patrolling to the extent of their claims. It also amassed some 50,000 troops in the area without any intimation as required by the November 1996 Agreement on military confidence-building measures.

India was taken by surprise but responded in measured terms, confronting the forces at the blockade points and building up the Indian Army’s strength to match the forces that China had brought in. The message was clear: India would not escalate, but neither would it withdraw. Diplomacy was used to revert to the status quo ante. The effort was at three levels: External Affairs Minister S. Jaishankar and National Security advisor Ajit Doval met their Chinese counterparts; Indian military commanders at the Chushul-Moldo border met theirs, while Indian officials also used the Working Mechanism for Consultation and Coordination (WMCC) with China, set up in January 2012. Jaishankar pointed out to his counterpart, Wang Yi, the various bilateral agreements between the two countries on maintaining peace on the LAC; he emphasised that the PLA’s actions were contrary to the understandings reached by former foreign ministers and special representatives of the two countries.^[8]

In March 2022, when Wang Yi visited New Delhi, Jaishankar reiterated to him that the “frictions and tensions that arise from China’s deployments since April 2020 cannot be reconciled with a normal relationship between the two neighbours.”^[9] A Chinese readout of the same meeting noted that Wang had responded by saying that the two countries “should put the boundary issue in a proper place in bilateral relations and not let the boundary issue define or even affect the overall development of bilateral relations.”^[10]

Wang, who is also his country’s Special Representative on the India-China border question, met his Indian counterpart Ajit Doval as well during the visit. Doval told him that putting aside the boundary issue as he had suggested could only happen after “immediate issues are resolved successfully.”^[11]  Subsequently, at their meeting on the sidelines of the BRICS^[b] National Security Advisors’ (NSA) meeting in Johannesburg on 26 July 2023, he added that the 2020 developments had “eroded strategic trust and the public and political basis of the relationship” between India and China.^[12]

At the senior military commanders’ level talks at Chushul-Moldo near the Pangong Tso Lake, India maintained that restoration of normalcy should start by first disengaging the forces involved in the face-to-face confrontation at the blockade points, after which the process of de-escalation of the militaries that had been amassed on either side of the LAC could follow, concluding with India resuming patrolling in the areas that China had blockaded. China’s approach, however, implied that India was needlessly exaggerating the extent of the faceoff. It again wanted the border issue separated from relations in other areas. India remained firm, with EAM S. Jaishankar reiterating that there could be no normalisation of relations unless the 2020 clock was turned back.

Within two weeks of the Galwan clash on 15 June 2020 in which 20 Indian soldiers were killed, India, using patient diplomacy at the Special Representatives (SRs) level, secured a pullback of Chinese forces by 1.5 km from the point where the clash had occurred.^[13] However, this was only at the site of the clash, and the other blockaded points remained a temporary ‘no patrolling’ zone.

Five meetings of military commanders followed with no outcome. The change occurred after Indian forces decided on a limited but important countermove. Starting on the night of 29 August 2020, and continuing over the next two days, they occupied certain key heights on the Kailash range that overlooked Chinese military positions in the Spanggur Tso area. They occupied certain heights on the south bank of the neighbouring Pangong Tso as well. China could have escalated the faceoff, but it did not and instead returned to the negotiating table.^[14] Negotiations were long and tedious. Despite various meetings of ministers, SRs, the WMCC and the military commanders, the next disengagement occurred only in February 2021 at Pangong Tso, with the Indian forces on the Kailash range also standing down.

The 12^th round of military-level talks in July 2021 succeeded in working out a disengagement at the Gogra post (Patrolling Point 17A), but this was only partial. It became clear in subsequent rounds that China was resistant to further disengagement. It was only more than a year later, in September 2022, that they finally agreed to disengagement at PP 15 in the Kugrang river valley, the area also known as Gogra-Hot Springs.

The negotiations stalled again thereafter. The 20^th round of Corps Commander-level talks in October 2023 did not yield any result on the remaining two areas—Depsang Bulge and the Charding-Ninglung Nala junction in Demchok. Neither did the 21^st round, held at the Chushul-Moldo meeting point in February 2024. A statement from India’s Ministry of External Affairs said that both sides “shared their perspectives” on following through with disengagement in the remaining areas of the LAC in eastern Ladakh.^[15]

The Depsang and Demchok agreement finally reached in October 2024 went beyond the agreements on disengagement in 2020-2022 at the four other points on the LAC. It not only involved disengagement, but also a restoration of Indian patrolling rights. As part of the agreement, India permitted the PLA to patrol to the extent of its claims at points in the eastern sector, notably Yangtse, where there had been a clash in December 2022. An innovation included in the restored patrolling arrangements was that both Indian and Chinese patrols would thereafter be coordinated to avoid faceoffs.^[16]

India’s Economic Arsenal

The economic pressure that seemed to have had some effect was the ban on around 350 popular Chinese apps in India, including TikTok. Simultaneously, restrictions were placed on the issuing of visas to Chinese nationals. Indeed, action against China had begun a little earlier, prompted, not by the faceoff that started in April 2020 and reached its climax in mid-June at Galwan, but due to Indian worry that the Covid-19 pandemic, which had exploded in March, could lead to opportunistic Chinese takeover of Indian companies. On 17 April 2020, India issued its ‘Press Note 3’, which placed restrictions on investments in India by countries “sharing (a) land border” with it.^[17]Also due to the Covid-19 outbreak, India stopped all direct flights between New Delhi and Beijing.

Other measures restricting China included investment screening, product bans and tax investigations, which only intensified after Galwan. Approvals of Chinese business proposals became rare, reducing further in 2023 when border negotiations to roll back the 2020 Chinese actions yielded no results. Chinese motor vehicle companies seeking to invest billions of dollars in India, for instance, were blocked. There were tax investigations into Chinese telecommunication companies such as ZTE, Huawei, Oppo, Vivo and Xiaomi; they were banned from India’s 5G trials and expanding into Indian highway projects.^[18] The visa ban from 2020 hit Chinese advisers and technicians needed for various projects already begun in the country.

India also gave a fillip to its domestic manufacturing economy with the Production Linked Incentives (PLI) scheme launched in March 2020, among whose objectives was attracting companies that wanted to leave China. However, the scheme will take time to achieve its full potential, which will also need continuing supply-chain links with China.^[c]

India has not been able to take advantage of the growing disconnect between the West and China, which led to the West’s ‘China plus One’ strategy—of dividing overseas investments between China and any one other destination, to obviate risks. It did lead to much investment shifting from China, but an Indian parliamentary panel report of 22 March 2024 noted that India had not been able to leverage it to much advantage,^[19] despite considerable government investment in the PLI and other schemes.

The Quad and the South China Sea

Following the 2020 developments, India also took decisive decisions to signal to the US that it would be part of its larger Indo-Pacific coalition to check China’s assertiveness. This coincided with the arrival of the Biden Administration in 2021, which took forward the initiative to shape the Quadrilateral grouping (Quad) of the US, India, Japan, and Australia. Biden boosted the Quad by hosting its first leadership-level summit virtually in March 2021, and then in person in Washington DC in September 2021.

India has encouraged the Quad geopolitical messaging. Earlier, in June 2018, at the annual Shangri-La Dialogue in Singapore, Prime Minister Narendra Modi had insisted that the Indo-Pacific was a geographic concept and not a strategy directed against any country.^[20] In September 2024, however, speaking at the Quad summit in Wilmington, Delaware, the PM declared that a “free, open, inclusive and prosperous Indo-Pacific” was the goal of the Quad^[21]—a visible change in messaging.

India also signed the joint statement at the summit which used sharp language against China, without actually naming the country.^[22] It opposed “any destabilising or unilateral actions that seek to change the status quo by force or coercion;” expressed serious concern about the militarisation of disputed features in the South China Sea and condemned “the dangerous use of the coast guard and maritime militia vessels, including increasing use of dangerous manoeuvres.”

India has opposed the notion of the Quad emerging as a military grouping. But its military does participate in the annual Malabar naval exercises in either the Pacific or the Indian Oceans, along with Australia, the US, and Japan. Another aspect of Indian strategy has been to subtly step up its own activities in the South China Sea. This was observed for instance in Modi’s first ever visit in early September 2024 to Brunei—a country that contests certain Chinese claims in the South China Sea. India has also been building new relations with the Philippines, which has major differences with China in the same region. It has sold its highly effective BrahMos cruise missile to Manila and has also made a couple of well publicised naval visits to the country.

India’s Changing Strategy

In 2024, there was a shift in India’s strategy, particularly its economic policy towards China, even as it maintained its stand on the LAC. In January, Rajesh Kumar Singh, Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT), hinted at the World Economic Forum in Davos that India could ease restrictions on Chinese investments if peace on the border was achieved.^[23] The next signal came in April 2024, in Prime Minister Modi’s interview to Newsweek, when he described ties between India and China as “important and significant.”^[24] He said there was need “to urgently address the prolonged situation on our borders so that the abnormality in our bilateral interactions can be put behind us.” He also hoped that “through positive and constructive bilateral engagement at the diplomatic and military levels, we will be able to restore and sustain peace and tranquillity in our borders.”^[25] In the next few months, there was a flurry of official meetings and statements suggesting that the two countries were attempting to reset their relations. The two dimensions of the change are discussed in the following paragraphs.

Economic Policy and Trade

After the 2024 general elections, there were signals that India’s economic policy towards China was softening to accommodate its dependence on Chinese trade. Booming China-India trade had reached US$136.2 billion in 2023, rising from US$135.98 billion in 2022. That the trade deficit crossed a huge US$100 billion was an indicator of the weakness of Indian manufacturing compared to that of China. Indeed, India depends on China not only for electronic products, but also their components. Even India’s vaunted pharmaceutical industry depends on China for its Active Pharmaceutical Ingredients (APIs). Despite successes such as Apple’s move to make its latest iPhone model in India, the country’s efforts towards meeting targets for industrial investment, factory job creation, and expanding manufacturing's share of its GDP have made little progress. Even production subsidies and protective tariffs have not worked. Indeed, early this year many parts of the PLI scheme, which were not showing encouraging results, were allowed to lapse.^[26]

India could also do with foreign direct investment (FDI) from China, which is the second largest global investor after the US.  While total FDI flow into India in 2024 remained substantial, net FDI flow—the difference between the total foreign exchange coming in and that going out—fell by 96 percent for a variety of reasons, dropping to just US$353 million.^[27]

The most important signal from India came on 22 July 2024, when the Ministry of Finance’s annual Economic Survey—which is released one day before the annual budget—called for reviewing restrictions on economic relations with China. It made a case for attracting Chinese FDI, which would improve Indian participation in global supply chains. Though the government was quick to deny any shift in India’s policies towards China, it had already triggered a debate.^[28] The Economic Survey noted that if India was to take advantage of the ‘China Plus One’ strategy, it needed to either integrate into Chinese supply chains, or use FDI from China “for boosting India’s exports to the US,” in the way other East Asian economies had done in the past. It added that “it is more effective to have Chinese companies invest in India and then export the products to these markets rather than importing from China, adding minimal value.”^[29]

Indian business groups have strongly supported this view. They want the stalled visa process for Chinese workers and engineers streamlined, as China-made equipment in India requires urgent servicing. (Some of the firms that lobbied were the same ones investing in the strategic PLI schemes to boost manufacturing.) The Ministry of Home Affairs has proved sympathetic, issuing guidelines to speed up Chinese visas.^[30] A Confederation of Indian Industries (CII) report even recommended a review of Press Note No. 3, and the adoption of a “non-restrictive approach towards investments, component imports; openness toward technology transfer in deficient areas, ease of inward movement of skilled manpower, and easing of non-trade tariffs.”^[31] However, in mid-August 2024, Rajesh Kumar Singh of the DPIIT made it clear that there would be no change in Press Note No. 3, though he added that 30-40 percent of the proposals that had come from China and Hong Kong in the last two or three years had been cleared.^[32]

Another indication of change was Niti Aayog Chief Executive Officer (CEO) B.V.R. Subrahmanyam’s remark in November 2024 that India should be part of the Regional Comprehensive Economic Partnership (RCEP) as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).^[33] India had precipitously pulled out of the RCEP after having entered into negotiations in 2013, fearing that its manufacturing sector would suffer on account of China.

India’s official approach was summed up by Finance Minister Nirmala Sitharaman in July 2025 when she noted that while a beginning had been made in normalising economic relations with China, “we need more [market] access and we need to have a lot more interaction, and possibly open some windows.”^[34] She added that China wanted the same and had said so to the External Affairs Ministry, but that “a sense of caution will have to be built in” and it would take some time to see how things work out.”^[35]

The Border Breakthrough

There was no progress on resolving the Chinese blockades in the last two of the six points—Depsang Bulge and Charding Ninlung Nala near Demchock—between July 2022 and June 2024. Shortly thereafter, in July 2024, Jaishankar and Wang Yi met twice in quick succession—first on the sidelines of the Shanghai Cooperation Organisation (SCO) Heads of State summit in Astana, and next in Vientiane, on the sidelines of an Association of South East Asian Nations (ASEAN) meeting. On both occasions, India sought an early resolution of the remaining issues in the border areas.

China played down the final resolution of the standoff and called for general development of “stable and predictable” China-India relations.^[36] The relevant Chinese press release quoted Jaishankar as saying that while the two sides had to “face the shadow of border events,” but India was ready “to take a historic, strategic, and open perspective to find solutions to the differences.”^[37]

Thereafter, India and China held two successive meetings of the WMCC in July and August. A statement from India following the second one in end-August, called it a “frank, constructive and forward looking exchange of views” that would help “narrow down the differences” and find “an early resolution” of outstanding issues.^[38] India also reiterated that respect for the LAC was “essential for restoration of normalcy in bilateral relations.” The following month, speaking to a Geneva think tank, Jaishankar noted that “roughly you can say about 75 per cent of the disengagement problems are sorted out,” while adding that some work still needed to be done.^[39]

On the same day, 12 September 2024, Wang Yi met Ajit Doval on the sidelines of the BRICS meeting in St Petersburg, where they discussed the “progress made in recent consultations on border issues.”^[40] The Chinese spokeswoman briefing the media on the matter noted that the China-India border situation was “generally stable and under control.”^[41] However, the tone of the Indian press release was different. Noting that the meeting gave the two sides an opportunity to “review the efforts towards finding an early resolution of the remaining issues along the LAC, which will create the conditions to stabilize and rebuild bilateral relations,” it said they agreed to “work with urgency and redouble their efforts to realise complete disengagement in the remaining areas.”^[42]

Details of the meetings between military and diplomatic officials in the run-up to the 21 October 2024 announcement on border patrolling in Depsang and Demchok were not available yet at the time of writing. But both sides announced it in low-key fashion. In New Delhi, it came only in Foreign Secretary Vikram Misri’s response to a question at a press briefing related to Prime Minister Modi’s late-October visit to Kazan, Russia, to participate in the 16^th BRICS summit. Misri stated that after negotiations between Indian military and diplomatic officials and their Chinese counterparts, “an agreement has been arrived at on patrolling arrangements along the LAC on the India-China border areas leading to disengagement and a resolution of the issues that had arisen in these areas in 2020.”^[43]  The Chinese comment came the next day at the official briefing of its foreign ministry spokesman, who said in response to a question that, after military and diplomatic efforts, “China and India have reached resolutions on issues concerning the border area.”^[44] He added that China would work with India to implement these “resolutions.” Neither side specified the areas in question which were only revealed in off-the-record briefings.

The border disengagement agreements in late 2024 helped restore a degree of stability on the Sino-Indian border. This, in turn, made economic and diplomatic re-engagement between the two countries possible. Barring a brief exchange between Prime Minister Modi and President Xi at a dinner in Bali on the sidelines of the G20 summit in November 2022, their first formal talk after the Galwan incident was on the sidelines of the aforementioned BRICS summit at Kazan.

Re-engaging China

An important outcome of the Modi-Xi meeting at Kazan was the instruction they gave to their respective SRs on the Sino-Indian boundary issue, Ajit Doval and Wang Yi, to meet soon. Much like Modi and Xi, the two had also last met in 2019.^[45] At the meeting, held in Beijing on 18 December 2024, both affirmed the recent disengagement agreement, “which completed the resolution of the issues that emerged in 2020,” as noted in the official press release.^[46] It said that at the meeting, Doval and Wang “reflected on the lessons learnt” from the events of 2020 to “prevent their recurrence,” and reiterated the importance of a border settlement, resolving to “ inject more vitality into the process”, discussing ways of maintaining peace and tranquillity and advancing “effective border management.”

A Chinese report of the event maintained that the two sides had reached a six-point consensus. Among the important points were the need to implement the agreement and ensure that border issues were “handled appropriately … [so that] they do affect the development of bilateral ties”; speed up border negotiations and refine rules for its management; enhance cross-border communication and resume the Kailash-Mansarovar pilgrimage and cross-border trade; and strengthen the SRs and the WMCC to ensure “follow up implementation.”^[47]

On 26 January 2025, Foreign Secretary Misri travelled to China for talks with his counterpart, Sun Weidong. The meeting’s success was evident from the remarks of Chinese Defence Ministry spokesman Senior Colonel Wu Qian in late February, who told the media that Indian and Chinese militaries were implementing the resolutions to end the standoff in Ladakh in a “comprehensive and effective manner,” and that China was most willing to work with India “to jointly  preserve peace and tranquillity in the border areas.”^[48]

On 17 March came further confirmation of improved ties when, in a wide-ranging podcast, Prime Minister Modi noted that while differences were to be expected among neighbours, it was important not to escalate them into disputes, adding that, “dialogue is the key to building a stable and cooperative relationship that benefits both countries.”^[49] He also mentioned his meeting with President Xi in Kazan. The next day, Chinese spokesperson Mao Ning expressed her country’s appreciation of Modi’s remarks, noting that “a cooperative pas de deux of the dragon and the elephant is the only right choice for China and India.”^[50]

On 31 August 2025, Modi travelled to China for the SCO summit in Tianjin, where he met Xi yet again on the sidelines, decisively marking the end of the tension-ridden phase of the Sino-Indian relationship that had followed the Chinese actions of 2020. Preceding the prime minister’s trip, Indian and Chinese officials visited each other’s countries, including both Jaishankar and Defence Minister Rajnath Singh going to China in July. Jaishankar’s remarks were not unexpected—border peace was fundamental to good relations between the two countries.^[51] For his part, Rajnath Singh created a minor flutter by telling his counterpart, Admiral Dong Jun, that it was necessary to “have a permanent solution of border demarcation by rejuvenating the established mechanism on the issue.” Immediately, China had its spokesperson respond that the SR mechanism and the 2005 ‘Agreement on the Political Parameters and Guiding Principles for the Settlement of the India-China Border Question’ already existed. When it was pointed out that the SRs had met over 20 times with little to show, she maintained: “The boundary question is complicated, and it takes time to settle it.”^[52]

Before Modi’s Tiajin visit, on 18-19 August 2025, Wang Yi also came to New Delhi. His meetings led to agreements which saw a resumption of direct flights between the two countries, expansion of tourism and pilgrimage opportunities, trans-border river cooperation, reopening of border trade at three points, and facilitated trade and investment flows.^[53] With Doval, he held the 24^th round of the SR dialogue, where it was decided to revitalise talks on a political bargain on the border issue, using the 2005 Political Parameters Agreement between the two countries. This could explore an “early harvest” agreement (on the Sikkim-Tibet boundary) as well as the setting up of a working group of the WMCC to “advance effective border management”, and create new points of military-to-military interaction at the Corps Commanders level in the Eastern and Middle Sectors.^[54]

Modi-Xi Meeting in Tianjin

The Modi-Xi meeting in Xianjin was a carefully curated event. According to the Indian readout following the meeting, both leaders “reaffirmed that the two countries were development partners and not rivals, and that their differences should not turn into disputes.”^[55] Not surprisingly, Modi underscored the point that peace on the border was important for “continued development of bilateral relations.” Both appreciated the “successful disengagement last year” and the peace and tranquillity since then. They hailed the efforts of the SRs and committed themselves to “a fair, reasonable and mutually acceptable resolution of the boundary question proceeding from the political perspective of their overall relations.” Normalisation in other areas was also noted, including the Kailash Manasrovar yatra; besides the resumption of direct flights, they committed themselves to visa facilitation.^[56]

The Chinese readout noted Xi telling Modi that “China and India are each other’s development opportunities rather than threats.”^[57] It repeated the Chinese formulation that a “cooperative pas de deux of the dragon and the elephant should be the right choice for the two countries.” However, it maintained the Chinese nuance on the eastern Ladakh issue when it claimed that Xi told Modi that the two “should not allow the boundary question to define overall China-India relations.” It also quoted Prime Minister Modi’s saying that “both countries [should] pursue strategic autonomy and an independent foreign policy, and their bilateral relationship is not subject to the influence of any third party.”

Unsettled Border Risk

India’s preoccupation with settling the border issue is based on its experience of the last 30 years. In the last few years, the security perspectives of the two countries have been at variance. India wants to enhance security by building up its border infrastructure to match China’s, alongside reaching out to the US. China views both moves as threats, the first on the border and the second in the Indo-Pacific region, and perhaps reacted as it did in eastern Ladakh in 2020 because of this.^[58]

Since 2020, the PLA has deployed around 20,000 to 30,000 troops in the Ngari and Shigatse areas, backed by artillery and air defence, with a surge capacity of 50,000. China has maintained a persistent edge in logistics and infrastructure and also constructed a wide range of facilities to support its deployments, including new barracks, ammunition dumps, prepositioned armour, supplies, and new heliports.^[59]

India has made equivalent deployments on its side of the LAC and has been improving its infrastructure, which now includes substantial tunnelling to enhance the speed of its troop movements. It has also emplaced armour, artillery, Unmanned Aerial Vehicles (UAVs) and other surveillance systems.^[60]

While disengagement of forces that were involved in faceoffs has already taken place, the problem is now of de-escalation. This is complicated by differences in infrastructure and terrain, since movement on the flat plateau is substantially easier for China than on the mountainous Indian side. It will require patient negotiation to get the countries back into the “mutual but equal security” mode they have been committed to since 1993.

The Price Paid

The 2020-2024 India-China stand-off led to some military casualties and had significant economic impact for both nations. Both have paid a price in terms of lost business opportunities, but the greater cost was the loss of trust between them, which will take time to be rebuilt.

The military losses—20 killed and scores injured—occurred over several hours of hand-to-hand combat in the freezing cold of the Galwan Valley on 15 June 2020; these were the first casualties on the LAC since 1975. Many died of hypothermia. China officially acknowledged only four fatalities, though it is believed that the figure may have been 10 times higher. Since then, both countries have deployed tens of thousands of additional military personnel on the border, along with artillery, tanks, and fighter jets.

The economic losses were not from the conflict, but a result of the subsequent policy changes and altered trade dynamics. India's policy requiring government approval for investments from bordering countries drastically reduced Chinese FDI from over US$534 million in 2019 to around US$205 million in 2020, and led to Chinese companies such as Great Wall Motor and BYD shelving over US$1 billion of investment plans in India. The ban on Chinese apps led to significant user base losses. Indian electronics manufacturers have reported production losses of approximately US$15 billion over four years due to the visa restrictions on Chinese workers and the added scrutiny of Chinese companies. Chinese companies faced various market access restrictions, such as anti-dumping duties on products such as steel, textiles, and chemicals, and scrutiny of mobile phone manufacturers operating in India. China too, put up export barriers, curbing technology transfers, and withdrawing 300 Chinese engineers from Foxconn's facilities in India, hindering India's manufacturing ambitions.

Conclusion

In the past five years, India has employed various means to manage the country’s situation with China. Confronted with what were clearly hostile actions, New Delhi has chosen to respond with diplomacy and dialogue, even while strengthening India defensive positions along the LAC.

There is little doubt that India and China need cooperative relations for both economic and geopolitical reasons. They confront many challenges, however, the primary one being their border dispute. The undefined 3,488-km LAC remains a flashpoint, with China occupying 38,000 sq km of Aksai Chin and claiming 90,000 sq km of Arunachal Pradesh. Incursions and infrastructure build-ups, like China’s dual-use Xiaokang villages,^[d] are seen by India as ‘salami-slicing’ tactics. After 2020, India has realised the importance of settling the border issue, while contrary to official rhetoric, China under Xi has shown little desire to find a common ground.

Geopolitical rivalry complicates the picture. China’s long-term ‘iron’ relationship with Pakistan has been a concern for India. There is also the Chinese expansion in the Indian Ocean Region, and control of the Hambantota port in Sri Lanka and Gwadar port in Pakistan. Similarly, India’s growing ties with the US, Japan, and Australia via the Quad are perceived by China as being part of a containment strategy.

The economic imbalance between the two generates instability too. India’s trade deficit, and the restricted market access for Indian pharmaceuticals and IT sectors in China, hinders deeper economic cooperation. Mutual investments lag behind trade volumes, limiting economic trust. Moreover, the Dalai Lama’s presence in India remains a source of perennial distrust for China. Control of Tibet remains a major issue of concern to Beijing and it is sensitive to India’s handling of the Dalai Lama and his followers.

Overall, while recent diplomatic moves and border agreements suggest a pragmatic intent to stabilise relations, the “coming closer” of the two Asian giants has been cautious and limited. China’s rhetoric, like Xi’s call for improved relations, contrasts with its regional strategies (such as its Belt and Road Initiative projects in South Asia), which India counters through platforms like BIMSTEC and the Quad. Both nations cooperate in multilateral settings, but strategic competition—driven by border disputes, differing global alignments, and economic imbalances—keeps them at arm’s length of each another.

In sum, India and China are engaging in selective cooperation to manage tensions, particularly on border issues, but deep mistrust and geopolitical rivalry prevent convergence. Their relationship is likely to remain a mix of cautious diplomacy, economic ties, and strategic competition in the near-term. Effectively managing ties, ensuring differences do not degenerate into conflict, and maintaining peace and stability for mutual benefit are the keys to this relationship.

Given China’s record, maintaining effective deterrence will be a key element in India’s management of China. This will have three aspects: first, India must ensure adequate Indian military capacity on the disputed border to prevent a repetition of the 2020 incidents and must keep adopting the latest military technology to keep pace with the PLA; second, it should follow up the disengagement in eastern Ladakh with a new set of confidence-building measures that will act as guardrails to ensure the relationship does not veer off track; and third, it needs to keep maintaining and sustaining a high rate of economic growth to effectively compete with China in the region. This process will necessarily involve trade and investment relations with China.

Delivering the 2024 George F. Kennan Lecture at the US National Defence University in early September 2024, Kevin Rudd, Australia’s ambassador to the US, former Prime Minister of Australia, and a known China expert, reminded the world of the devastating global consequences of a possible war over Taiwan, regardless of who would prevail. He called for a strategy of integrated deterrence, “combined with a policy of managed strategic competition and associated guardrails to reduce the risk of war by accident, escalation and miscalculation.”^[61]

This could well be the formula that India should invoke.

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Manoj Joshi is Distinguished Fellow, ORF.

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All views expressed in this publication are solely those of the author, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel. 

Endnotes

• International Affairs
• China
• India
• galwan border clash
• india china border dispute
• india china border skirmishes
• india china lac agreement
• india china patrolling agreement
• india china policy
• india china relations

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