India and China’s geopolitical rivalry has received intense media attention over the past five years. Military clashes in Galwan Valley in June 2020 have made China a part of India’s domestic political narrative in a way that’s never been seen before.
Last week, when Prime Minister Narendra Modi stood in parliament to respond to opposition leader Rahul Gandhi’s comments on China, we witnessed how Beijing now shapes India’s foreign and domestic political narratives.
Gandhi had criticized the Modi government for falling behind China in economic growth, citing Chinese company DeepSeek’s launch of its artificial intelligence model. Underlying those comments is the narrative that China is impacting India’s domestic and foreign policy as New Delhi has sought to project itself as a rising global power.
However, India’s China challenge isn’t exactly new, as Beijing has influenced India’s foreign policy in its neighborhood for decades. From India’s Look East Policy in the 1990s under Rajiv Gandhi to the Act East Policy under Prime Minister Narendra Modi, India has reacted to developments in China’s external relations to adjust its policy in the Near East.
China’s rise in the 21st century has further exacerbated the security dilemma for India’s military and security establishment. Due to a resurgent China, India’s challenges to its east have grown complex. But China defined India’s challenges in the Near East for many decades before the current geopolitical environment.
Avinash Paliwal’s timely new book “India’s Near East: A New History” gives an account of China’s decades-long role in shaping India’s domestic policy.
China’s victory in the 1962 Sino-Indian War gave birth to what Paliwal describes as India’s “two-and-half-front security dilemma.” This dilemma entails deterring China and Pakistan simultaneously while tackling insurgent movements in the Northeast of India.
Paliwal details how China’s rise has pushed India to recalibrate its regional foreign policy, particularly after the 1962 war. This war, which ended in a defeat for India, exposed the vulnerabilities of its northeastern frontier and led to a significant shift in New Delhi’s approach toward regional security. One of the immediate consequences of this was India’s increased militarization of its border states, particularly Arunachal Pradesh, Nagaland, and Manipur, which continue to be hotbeds of insurgency and cross-border tensions.
China’s role in India’s Northeast has been part of long-running media discourse. Paliwal’s book delves into the events, backed by first-hand accounts that describe how Beijing had shaped India’s eastern neighborhood.
China has provided material support to the insurgency movements in India’s Northeast, a fact that is somewhat well-known. The book substantiates these claims with evidence and first-hand accounts by former Indian officials who worked in the security establishment. Paliwal provides a detailed account of backchannel talks between the Indian state and insurgent groups, backed by interviews of former Indian officials and members of the insurgent groups.
The China-U.S. great power rivalry has spotlighted New Delhi’s own geostrategic competition with Beijing. But, as Paliwal argues, India-China geopolitical competition has notably reshaped Indian foreign policy for decades – as it still does.
Myanmar is one example. While India initially supported pro-democracy movements in Myanmar during the 1980s, it later shifted to engaging with the military junta as China deepened its economic and military cooperation with the regime. China’s investments in Myanmar’s infrastructure, including the Kyaukphyu deep-sea port and gas pipeline projects, have significantly enhanced its presence in the Indian Ocean.
Since the beginning of Myanmar’s Civil War in 2021, India and China have once again competed to influence Naypyidaw and the pro-democracy militia forces. India has sought to influence the junta in Myanmar with its own statecraft but with mixed results. Paliwal critiques India’s slow progress in these efforts, noting that while India has made strategic investments in the Kaladan Multi-Modal Transit Transport Project and the India-Myanmar-Thailand Trilateral Highway, these initiatives pale in comparison to China’s Belt and Road Initiative (BRI) investments in the region.
Similarly, India’s recent sale of the BrahMos missile system to the Philippines and planned missile sales to Vietnam and Indonesia are motivated by the need to counter China’s geostrategic influence in Southeast Asia. New Delhi and Manila have grown close as both countries face increasing pressure from China’s gray-zone tactics along the India-China border and the South China Sea.
New Delhi’s growing ties with Taipei have evolved under the shadow of China-India border tensions since the June 2020 clashes in Galwan. Over the past five years, India and Taiwan have deepened economic and security cooperation. New Delhi has focused on strengthening economic ties with Taipei by inviting Taiwanese semiconductor companies to establish business in India. However, the underlying factor behind New Delhi and Taipei’s security calculus cooperation is balancing China’s dominance in key technologies.
India’s challenges following the coup in Bangladesh have made New Delhi aware of Beijing’s growing influence on Dhaka. Bangladesh has emerged as a top buyer of Chinese weapons, raising alarm in New Delhi over the strategic partnership between Dhaka and Beijing.
India played a pivotal role in Bangladesh’s liberation in 1971, yet its influence in Dhaka has fluctuated due to internal Bangladeshi politics and China’s economic outreach. Paliwal emphasized how China’s growing economic ties with Bangladesh, including its investment in infrastructure projects such as the Padma Bridge and deep-sea ports, have challenged India’s traditional dominance in the country.
New Delhi’s response to China’s support for Dhaka has been a mix of economic incentives and strategic diplomacy. India has extended a line of credit to Bangladesh and strengthened bilateral trade, but China’s financial muscle and rapid project execution give it an edge.
At home, New Delhi’s industrial policy is increasingly shaped by Beijing’s economic statecraft with the export-driven economy. In the fiscal year 2024, India’s trade deficit reached $85 billion. China remained its largest import partner, with imports totaling $65.89 billion from April to October 2024, reflecting a 9.8 percent increase compared to the previous year. Meanwhile, India’s exports to China dropped by 9.37 percent to $8 billion during the same period. The trade deficit with Beijing has made New Delhi vigilant about trade inter-dependency with its primary strategic rival.
In October 2024, China and India agreed to disengage their troops in two key locations that have been the fulcrum of tensions in Eastern Ladakh since 2020. But despite the disengagement, China and India are still locked in a stand-off in Eastern Ladakh, according to the Indian Army chief’s recent comments.
China wants to resume trade exchanges that were shuttered after the 2020 China-India clashes in Ladakh. But Beijing’s offer to resume trade and investment has started an intense debate within India’s economic planning establishment. In October 2024, Nirmala Sitaraman, India’s finance minister, said, “We want business, we want investments, but we also need safeguards. India is in a very sensitive neighborhood. I cannot blindly welcome FDI without considering where it’s coming from.”
Sitaraman’s comments were in response to an earlier report by India’s economic adviser, which backed more direct investment from China to normalize economic relations with Beijing. “Among these choices, focusing on FDI from China seems more promising for boosting India’s exports to the U.S., similar to how East Asian economies did in the past,” said the Indian economic survey report published in July 2024.
The latest economic survey report published last month, however, has adjusted its earlier comments while flagging the risk of trade dependency on China.
Today, India’s economic and security statecraft are increasingly a reaction to China’s statecraft in India’s neighborhood – and the rest of the world. Beijing’s influence in India’s neighborhood has a long history, as Paliwal’s book shows, but the new challenges posed by Beijing’s statecraft have now intricately linked India’s foreign and domestic policy to China’s actions.