For India, U.S. President Donald Trump's tariff threats and his engagement with Pakistan might be considered good reason to cozy up to China, a long-time regional rival but now a fellow target of Trump's attacks.
Beyond their mutual need for alternative trading partners to the U.S., which for years has been a top importer of goods from both countries, India is keen for foreign investments in industries from automobiles to electronics to semiconductors.
Political and economic fissures run deep between the two giant neighbours, however, and may yet get in the way of any meaningful mending of ties.
Last week, India gave its clearest sign in years that it is ready for closer economic relations with China. The government's top think tank, NITI Aayog, proposed easing the scrutiny of investments from China and other nations with which India shares a land border. The restriction was imposed in 2020 after skirmishes along the India-China border.
Read an exclusive report by Reuters journalists Sarita Chaganti Singh and Nikunj Ohri on the proposal.
The government's chief economic adviser, V. Anantha Nageswaran, had already floated the idea that India needs greater investment flows from China in an annual economic report last year, only to face push-back from political leaders.
Government data suggests that foreign investment flows directly from China were just $2.5 billion over the 25-year period between April 2000 and March 2025, or 0.34% of India's total inflows, although that excludes investments that flow through third countries like Mauritius for tax advantages.
There have also been hints of a thaw on the diplomatic front.
Early last week, Indian Foreign Minister Subrahmanyam Jaishankar travelled to China, the first such visit since 2020. India and China, he said, must resolve friction along their border, pull back troops and avoid restrictive trade measures to normalise their relationship.
Trump's renewed engagement with Pakistan, which prompted a rare diplomatic protest from India, may also encourage a rethink of relations with China, Reuters journalists Shivam Patel and Aftab Ahmed write in this report.
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