Thawing India and China relations have sparked hopes for a new strategic partnership, but Bernstein warns that the relationship is likely to remain largely transactional and focused on trade, with limited strategic benefits for India.
While diplomatic gestures signal warming ties, deep-seated challenges and structural imbalances in trade and geopolitics suggest cooperation will stop short of a true alliance.
“China is unlikely to become a genuine ally,” Bernstein analysts said. India’s manufacturing base is not robust enough to offer China meaningful supply chain alternatives, and Indian exports to China remain minimal relative to China’s broader import needs.
The analysts note a stark trade imbalance, with India exporting little to China while relying heavily on imports of electronics, automotive components, and pharmaceuticals from its neighbor. Even as India relaxes restrictions on Chinese apps, foreign direct investment, and visa policies, the fundamental trade equation favors China.
Bernstein points to unresolved border disputes, China’s close ties with Pakistan, and India’s cautious attitude toward opening consumer and agricultural sectors as critical roadblocks. Economically, India stands to gain more by deepening relations with the U.S., where longstanding partnerships offer more substantial strategic advantages.
Progress in diplomatic talks has led to some reopening of flight routes and easing visa restrictions, but major concessions like lifting app bans remain uncertain. The report concludes that for now, India-China ties are more about managing losses and maintaining necessary supply chains than forging a new geopolitical alliance.
Until border issues are resolved and more strategic compromises are made, the partnership is expected to stay symbolic rather than substantive. The real power dynamic, Bernstein suggests, hinges more on broader multilateral moves such as BRICS rather than bilateral India-China relations.
As India and China attempt to mend ties against the pinch of President Trump’s tariffs, Bernstein suggests investors should cool expectations on a true alliance forming and focusing instead on selective trade opportunities and navigating geopolitical realities.
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