The bilateral relationship between India and China is a key foreign policy challenge that will require concerted focus and effort by the Narendra Modi government. The iteration of bilateral priorities in the telephone conversation between Prime Minister Modi and Chinese Premier Li Keqiang marks a good beginning. Given that China offers, at the same time, a big economic opportunity and a strategic challenge, dealing with it will necessitate shedding the heavy-footedness and diffidence that has held back Delhi’s China policy so far. The UPA’s China policy ended up denying the Indian economy the full benefits of economic cooperation with China, by citing security considerations, while glossing over genuine security issues by claiming political convergence with Beijing.
Modi’s emphasis on the economic aspect of foreign policy could see closer attention paid to Southeast Asia and the Asia Pacific, and China is arguably the most important and trickiest component of that picture. No matter how fast the Indian economy recovers and the Chinese slows down, if at all, Delhi cannot hope to close the gap any time soon. Instead, it should manoeuvre its disadvantage into advantage and embark on an economic partnership that invites and eases Chinese investment. While bilateral trade is expected to touch $100 billion in 2015, India needs to redress its $40 bn trade deficit. Li and Modi have reportedly agreed on frequent high-level exchanges. Chinese Foreign Minister Wang Yi’s forthcoming visit and Modi’s invitation to President Xi Jinping signal that Sino-Indian engagement may become more result-oriented. Modi and Xi will also have the opportunity to interact at the BRICS summit in Brazil in July.
