Xi Jinping heads to New Delhi for BRICS as India-China thaw faces its real test

Chinese President Xi Jinping is preparing to visit New Delhi for the September 12-13 BRICS Leaders’ Summit, marking his first trip to India in seven years and creating one of the most consequential tests yet of the cautious diplomatic thaw between Asia’s two biggest countries. Indian Prime Minister Narendra Modi and Xi are expected to have an opportunity for high-level engagement as both governments explore whether the improvement in political contacts can translate into progress on trade, investment, visas and border management.

The timing makes the visit unusually important. India is hosting an expanded BRICS grouping while the war involving the United States and Iran is disrupting energy markets and exposing differences among member countries, including Iran, Saudi Arabia and the United Arab Emirates. China has publicly backed India’s BRICS presidency, with its ambassador in New Delhi describing the September summit as an opportunity to strengthen cooperation among the enlarged group.

Why could the Modi-Xi meeting matter more than the formal BRICS summit agenda?

The immediate diplomatic signal is the location itself. Xi last travelled to India in October 2019 for his informal summit with Modi at Mamallapuram, before the 2020 border confrontation in eastern Ladakh pushed bilateral relations into their deepest crisis in decades. The subsequent military standoff, including the deadly Galwan Valley clash, damaged political trust and led New Delhi to tighten its scrutiny of Chinese investment and technology companies.

Relations have gradually stabilised as the two governments reopened diplomatic channels and pursued additional discussions on their disputed frontier. However, improved political communication has not automatically restored the commercial relationship. Chinese companies continue to face regulatory and investment constraints in India, while Indian businesses have complained about market-access difficulties, equipment restrictions and visa delays affecting projects dependent on Chinese technical personnel.

That explains why reports that the two sides are considering reviving or creating a structured strategic economic dialogue could prove more consequential than ceremonial summit language. Such a mechanism could provide officials with a regular platform to address the trade deficit, investment approvals, manufacturing partnerships, visas and market-access disputes without requiring every issue to be elevated to the leaders themselves.

Can India and China rebuild economic ties while their strategic mistrust remains unresolved?

Economic interdependence remains difficult to separate from national-security concerns. India relies heavily on Chinese inputs across electronics, machinery, renewable-energy equipment and industrial supply chains, yet New Delhi has also spent years encouraging companies to reduce excessive dependency on individual foreign suppliers. China, meanwhile, has its own restrictions governing the export of certain technologies and industrial equipment.

Some selective openings are already visible. India has allowed certain Chinese-linked investments and joint ventures to progress, while companies in sectors such as electronics manufacturing have sought structures that combine Indian ownership or production capacity with Chinese technology and supply chains. That suggests the emerging model may not resemble the relatively unrestricted commercial relationship that existed before 2020.

Instead, the two governments may move toward controlled economic normalisation in sectors where cooperation serves both sides while maintaining restrictions around telecommunications, financial technology, strategic infrastructure and other sensitive areas. Such an arrangement would allow trade to expand without requiring either government to declare that the security dispute has disappeared.

How could the Iran conflict and BRICS divisions complicate India’s diplomatic balancing act?

The summit is taking place under extraordinary geopolitical pressure because Iran is itself a BRICS member while the continuing conflict has disrupted the Strait of Hormuz and driven oil prices above $100 a barrel. India, one of the world’s largest energy importers, has a direct economic interest in reducing instability while also maintaining relationships with the United States, Iran, Saudi Arabia, the United Arab Emirates and other competing powers.

That makes New Delhi’s chairmanship a diplomatic test rather than simply an opportunity to showcase the growth of BRICS. Negotiators have been trying to bridge differences over how the group should describe the West Asia conflict in any joint declaration, particularly because members affected directly by the fighting may not share the same strategic interpretation.

Xi’s presence, together with Russian President Vladimir Putin and other leaders, therefore gives Modi an opportunity to position India as a convening power capable of maintaining working relationships across competing blocs. The challenge will be extracting practical agreements from a grouping whose growing membership has also produced increasingly diverse geopolitical interests.

What should investors and businesses watch after Xi Jinping’s New Delhi visit?

The most meaningful indicators will come after the summit rather than during the ceremonial meetings. Businesses should watch for progress on visa processing, approvals for Chinese investment, industrial-equipment exports, proposed joint ventures and any formal mechanism for economic dialogue. A genuine thaw would be visible through administrative decisions affecting companies, not simply warmer language from political leaders.

Border stability will remain the limiting factor. A sustained reduction in military friction could gradually increase confidence, while another serious confrontation would quickly reverse commercial progress. India and China therefore appear to be testing whether they can manage strategic competition while reopening selected economic channels.

The broader significance is that neither country needs to become a close strategic partner for the relationship to become economically less restrictive. If Modi and Xi establish predictable mechanisms for managing disputes, even a limited improvement could reduce uncertainty for manufacturers, exporters and investors operating across the two markets.