India-China relations ease with Indian delegation visit

As energy shocks from the Iran war highlight India’s vulnerability to fossil fuels, India’s companies are turning to China to explore connections in electric vehicle charging, battery solutions and renewable energy.

This is the first time in over five years that a delegation of Indian businesses has visited China, according to Ranjeet Mehta, general secretary and CEO of Indian trade body PHD Chamber of Commerce and Industry. Mehta told CNBC that between March 29 and April 4, eight Indian companies met with Chinese firms from Shanghai, Zhejiang and Wuxi.

Mehta said, “Energy security is extremely critical for our country, especially in the environment of “problems” arising from the conflict in the Middle East.

India is the world’s third largest oil importer and second largest oil consumer ICompressed petroleum gas, or LPG, is heavily dependent on supplies passing through the Strait of Hormuz. Rising energy costs and supply chain disruptions pose significant downside risks to the world’s fastest-growing major economy.

According to the industry body, six of the eight companies are startups operating in electric vehicle charging, electric trucks, battery storage and energy trading.

Stating that China has developed advanced technology in renewable energy and electric vehicle charging, Mehta said, “India needs these technologies.”

India aims to compensate for electric vehicles 30% of total sales by 2030but adoption is hindered by inadequate charging infrastructure and persistent range anxiety.

The Indian industrial body plans to revisit China with a larger delegation during the Canton Autumn Fair, a major trade fair in Guangzhou, later this year.

“First Indian business delegation to visit China in over 5 years ends in Shanghai,” he wrote Yu Jing“Icing is real,” a spokesperson for the Chinese Embassy in India added in a post on X.

Less than a month ago, on March 11, the Indian government relaxed the rules allowing Chinese investments to enter the country. These rules had been tightened since 2020, when relations soured following the deadly border clash in the Galwan Valley in which scores of Indian and Chinese soldiers died.

Ashish Bagadia, corporate finance and investment banking partner at BDO India, said the recent visit of the PHDCCI delegation and the relaxation of investment rules in certain sectors were “early signs of renewed interest, but the recovery remains cautious and gradual rather than dramatic.”

Bagadia added that Indian companies are “more willing to establish technology transfer partnerships and joint ventures” with Chinese companies in India “rather than making a significant impact in China.”

The two neighbors have been gradually working to improve relations since last year.

After the USA imposed a 50 percent customs duty on India in August last year, Indian Prime Minister Narendra Modi made his first visit to China in seven years to attend the Shanghai Cooperation Organization summit.

Since then, the two countries have taken many steps to normalize relations, including the resumption of flights and the withdrawal of troops from the border.

“India recognizes that it cannot be competitive in emerging technology sectors without some level of trade interaction with China due to China’s dominance in areas such as rare earths, active pharmaceutical ingredients, and batteries,” Richard Rossow, CSIS’ senior advisor and director of India and emerging Asian economies, told CNBC in an email.

Rossow added that if China wants to maintain export-led manufacturing growth, “India’s growing market clout is hard to ignore,” and noted that Beijing would likely match India’s enthusiasm for repairing ties.