Indian business leaders may have played a big role in helping Prime Minister Narendra Modi and Chinese President Xi Jinping reach a breakthrough agreement on a long-disputed border area in the Himalayas, according to Bloomberg. The two leaders met for the first time in nearly five years at the BRICS Summit in Kazan, Russia, and this meeting ended with an important step towards peace.
The story behind this breakthrough is compelling: for months, top CEOs in India have been urging Modi’s government to ease the restrictions placed on China after a major 2020 clash along the Line of Actual Control (LAC), the 3,500-kilometer-long border between the two nations. That clash saw tragic losses on both sides, with 20 Indian soldiers and four Chinese soldiers killed, sparking a downward spiral in India-China relations. Following that incident, Modi’s government took several bold steps: blocking Chinese companies from investing in India, banning hundreds of Chinese apps, slowing visa approvals, and holding up major investment deals.
The harsh measures also led to the collapse of several big investment plans, like a $1 billion electric vehicle project from the Chinese company BYD. While the restrictions aimed to reduce India’s reliance on Chinese companies, Indian CEOs began to argue that these moves were having unintended consequences. They warned that these restrictions were backfiring, hitting Indian companies hard and undermining Modi’s ambitious goal to transform India into a global manufacturing hub, especially in sectors like chip manufacturing.
These business leaders’ lobbying efforts seem to have worked. At the BRICS Summit, Xi and Modi held a crucial talk, where Xi reportedly agreed “in principle” to Modi’s ideas for improving relations. According to Chinese state media, both leaders committed to keeping disagreements from harming overall relations.
According to Bloomberg, the new plan for easing restrictions could start by approving more visas for Chinese technicians and resuming direct flights between the countries. Major investment proposals from Chinese companies would also be handled case-by-case, giving priority to those focused on manufacturing and supported by government incentives. India is also considering allowing Chinese companies to invest up to 10% in majority-owned Indian companies in areas like electronics and electric vehicles, according to an unnamed Indian Finance Ministry official.
As members of BRICS—a group of emerging economies that includes Brazil, Russia, South Africa, and now several new members, like Egypt and Iran—India and China have reasons to work towards a smoother relationship. The Kazan meeting has already sparked attention worldwide, as both nations may now be one step closer to setting aside their differences and building a stronger foundation for the future.
