Consider the geopolitics and the business ends. Two economic behemoths from Asia share a nearly 3,400-km uneasy mountainous border. They are large trading partners, whose volumes after a bloody Himalayan confrontation, is seemingly getting frayed at the edges.

On the surface, and off it, three years after the India-China skirmish at Galwan, Ladakh in 2020, business, political and government relations between the two countries have not thawed. This is only natural.

For example, a recent news reportindicated that since FY 2021, 58 applications from Chinese companies have been rejected by the Indian government.Further, a Ministry of Corporate Affairs circular last year stipulated stringent rules for clearing applications from “neighbouring countries” -- a thinly veiled euphemism for China since Indian trade with other South Asian countries are relatively small, apart from Bangladesh -- and appointment of nationals from those countries to the board of their companies in India.

The Enforcement Directorate’s search and scrutiny of Chinese smartphone companies in India like Vivo, Xiaomi, Vivo and Oppo continue. New Delhi is quite willing to bare its fangs. Chinese companies like Huawei and ZTE have been barred from offering Indian telecom carriers’ equipment for 5G services.

India also pulled out of the China-led Regional Comprehensive Economic Partnership (RCEP), choosing instead to become a partner in the India Middle-East Economic Corridor (IMEC) during the recent G20 Summit in New Delhi.

Therefore, when it was announced last fortnight that India’s steel tycoon Sajjan Jindal-led JSW will take a 35 per cent stake in the Chinese-owned MG Motors with a provision to take a majority stake, observes’ antennae went up: could this be a way of the future for Indo-China business collaborations?

“Our strategic collaboration with SAIC Motor aims to grow and transform the MG Motor operations in India with a focus on green mobility solutions. The joint venture paves the way for bringing a world-class technology-enabled futuristics suite of automobile products, including the new generation of intelligent connected NEVs and ICE vehicles,” said JSW Group’s Parth Jindal,

Automobile sector expert Murad Ali Baig agrees: “Chinese companies are known for their business seduction too, apart from aggression. Today, technology in automobiles is moving so fast. What also makes a difference in a particular country is a company’s market strength. To that extent, a strong Indian business group like JSW would be a good fit for MG Motors.”

There are other straws in the wind. Earlier this year it was announced that Chinese smartphone company Honor, which had left the Indian market a few years back, would be back in the country through a local entrepreneur.

Again, even though 267 Chinese apps were banned by the Indian government after the Galwan clash, global media firm restoftheworld.org’s audit found that at least eight of India’s top 100 free downloadable apps were from Chinese companies like Bytedance, Xiaomi, Alibaba and Joyy.

Finally, even though India’s start-up landscape has cooled down in the last six months led by the meltdown at edtech major Byju’s, leading Chinese companies and private equity firms continue to be invested in some of India’s marquee start-ups. These include investments in at least 18 start-ups and companies including Byju’s, Zomato, Ola and Policy Bazaar.

Message In The Bottle

Are the above instances a flash in the pan or is there hope for a gradual normalisation between the two countries at least on the business front? It is unlikely that businesses can do much without state support. What is likely is that market and technology dynamism could infuse a sense of realism and practicality in the government’s mind.

Take the case of the MG Motors-JSW deal. It could perhaps be a win-win deal for all. While currently, JSW will take a 35 per cent stake in MG Motors India, there have been reports that the Indian equity could go up to a majority 51 per cent.

“While this is the preferred route for India, from a Chinese perspective, the country is moving out gradually from manufacturing to advanced technologies. Therefore, giving up equity in India may not be averse for Chinese companies,” said a professor of the Jawaharlal Nehru University, who is an expert on China but did not want to be named.

Second, in a November 2023 podcast between Brookings Institution, USA, senior fellow Tanvi Madan and The Asia Group India Partner, Ashok Malik, the latter said, “I think telecom companies and power companies, in particular, would in an ideal world like to have the option of access to Chinese suppliers because it simply gives them more options. You can look at the Chinese supplier, a Swedish supplier, a Japanese supplier and then play one off against the other and go for the cheapest.” He, however, added that Indian business cannot fully discount the government’s hard sentiments.

Third -- and yet -- despite the political and geo-economic standoff, the Indian marketplace and consumer preferences cannot be shrugged off either. Therefore, if Chinese apps and smartphones today have a big bite of the market share despite the Indian government’s clampdown, it speaks volumes of how market sentiments can overcome that of the government.

Over the years, China has established itself as the epicentre of the global supply chain. Notwithstanding the Sino-India standoff in Ladakh, China continues to be a key trading partner for diverse countries all over the world and India is no exception.

According to a recent note issued by the Indian Embassy in Beijing, "From 2015 to 2022, India-China bilateral trade grew by 90.14 per cent, an average yearly growth of 12.87 per cent. In 2022, the overall trade with China increased by 8.47 per cent year-on-year to reach USD 136.26 billion, crossing the USD 100 billion mark for a second time in a row.” And this assessment comes two years after Galwan and notwithstanding the increasingly lop-sided balance of trade between the two countries.

In the final count, while national security is paramount and trust was seriously compromised after the Galwan bloodletting, there needs to be a balance between Indian geoeconomics and business.