India–China Reset: PM Modi’s China Visit Signals Pragmatic Progress for Trade & Security

Prime Minister Narendra Modi’s visit to China for the Shanghai Cooperation Organisation (SCO) Summit marked a significant diplomatic moment in India–China relations. This was Modi’s first visit to China since the 2020 Galwan Valley clashes, and it was widely seen as an attempt to reset ties between Asia’s two largest economies. The visit carried weight not only in terms of bilateral relations but also in shaping regional geopolitics, security alignments, and business opportunities.

Terrorism Takes Center Stage

One of the most striking aspects of the meeting between PM Modi and Chinese President Xi Jinping was India’s strong emphasis on counter-terrorism. Modi raised the issue of cross-border terrorism originating from Pakistan, highlighting its destabilizing impact on regional peace. China, which has historically stood close to Pakistan on many fronts, extended a notable assurance of cooperation to India on this matter. While this commitment remains to be tested in practice, the signal of support is diplomatically significant.

This alignment on terrorism, even if tentative, marks a shift in the India–China narrative. It reflects Beijing’s growing realization that stability in South Asia is also in its long-term interest, especially when both nations are looking to position themselves as global growth leaders.

A Thrust on Economic Balance

Beyond security, economic engagement was a central theme of Modi’s China dialogue. India’s widening trade deficit with China has been a recurring concern, and the Prime Minister emphasized the need for a fairer and more balanced trade relationship. Discussions reportedly included steps to ease export barriers, improve visa processes, and even resume direct passenger flights—moves that could boost commerce, investment, and people-to-people exchanges.

For India’s MSME sector, which is eyeing new global markets, this economic reset holds promise. Reduced barriers to trade with China could open fresh opportunities in manufacturing, pharmaceuticals, technology, and services. Simultaneously, it offers Chinese investors an opportunity to re-engage with India at a time when the global supply chain landscape is shifting rapidly.

Border Issues: The Shadow That Remains

Even as the two leaders struck a constructive tone, the border issue remains the elephant in the room. Since the 2020 clashes, tensions along the Line of Actual Control have defined the India–China narrative. While Modi acknowledged that the border has remained relatively calm in recent months, Xi insisted that the boundary dispute should not overshadow the broader relationship.

This indicates a pragmatic stance on both sides: a recognition that while the border problem cannot be resolved overnight, cooperation in other areas should not be held hostage to it. For businesses and investors, a stable border means reduced geopolitical risks—an essential precondition for long-term economic engagement.

What It Means for MSMEs and Indian Business

PM Modi’s China visit could have tangible implications for Indian small and medium enterprises:

• Market Access: Easier trade protocols could allow Indian SMEs to penetrate Chinese markets in sectors like textiles, handicrafts, and IT services.

• Investment Opportunities: A thaw in relations may revive Chinese interest in Indian manufacturing and start-ups, bringing fresh FDI flows.

• Tourism & Education: Restoration of direct flights and eased visas can boost cross-border tourism and student exchanges.

• Geopolitical Stability: For exporters and globalizing MSMEs, reduced border tensions translate to lower risk premiums and greater confidence in long-term business planning.

The Road Ahead: Optimism with Caution

While Modi’s visit has infused fresh optimism into India–China relations, caution remains necessary. China’s strong strategic partnership with Pakistan, India’s continued concerns over trade imbalance, and sensitive issues like Chinese hydropower projects in Tibet still pose challenges. Moreover, commitments made in diplomatic exchanges often take time to translate into policy outcomes.

For now, the visit represents a careful recalibration—neither a full reconciliation nor a confrontational stance. It underscores a pragmatic path where cooperation on trade and security can move forward despite unresolved disputes. For Indian MSMEs, this is a moment of opportunity: to explore new markets, attract investment, and build resilience in a globalized economy that increasingly values regional stability.

SMEStreet Exclusive Take

The India–China equation is too critical to be ignored—both in economic and strategic terms. PM Modi’s China visit signals that New Delhi is willing to engage constructively while safeguarding national interests. For entrepreneurs, exporters, and investors, the message is clear: watch this space closely. The emerging stability could well unlock fresh opportunities for Indian businesses, provided they act swiftly and strategically.