An influential member of Prime Minister Narendra Modi's Economic Advisory Council has made a striking case for India to embrace closer economic integration with China, arguing that protectionist barriers should give way to pragmatic engagement that leverages New Delhi's competitive manufacturing advantages. Rakesh Mohan, a former Reserve Bank of India Deputy Governor, contends that the geopolitical landscape has shifted sufficiently to warrant a fundamental reassessment of India's China strategy, particularly as traditional Western partnerships show signs of instability.
Mohan's intervention is significant because it signals division within Modi's inner circle on how to manage relations with Beijing following the traumatic 2020 border clashes that prompted New Delhi to tighten oversight of Chinese capital flows. His public comments suggest that at least some influential policymakers now view the security concerns that dominated the post-conflict period as less pressing than the economic imperatives of competing within Asian manufacturing networks. The adviser articulated a vision in which India attracts Chinese manufacturers to labor-intensive sectors such as textiles, garments, footwear and furniture, thereby creating employment while building export capacity.
The structural economic imbalance between the two nations frames much of Mohan's reasoning. India currently imports more than $130 billion in goods annually from China while exporting comparatively little, creating a trade deficit that Mohan characterises as untenable without fundamental strategic shifts. Rather than perpetuating this one-sided dynamic through import restrictions, he argues that India should identify specific sectors where domestic producers can compete effectively with Chinese suppliers, using lower labour costs as a principal attraction for relocating manufacturing facilities. This approach represents a departure from the defensive economic nationalism that has dominated Indian policy circles since 2020.
Mohan's argument gains force from his explicit critique of American reliability as an economic partner. He contends that President Donald Trump's tariff policies and shifting trade postures have rendered the United States an unpredictable foundation for India's long-term prosperity. This assessment carries particular weight given India's historical preference for Western alignment, suggesting that even establishment figures close to Modi now harbour doubts about Washington's constancy. The adviser frames economic diversification away from exclusive reliance on Western markets not as anti-American positioning, but as prudent risk management in an era of trade policy volatility.
The historical context amplifies the boldness of these recommendations. India and China remain strategic competitors shaped by their 1962 war and decades of border tensions along the Himalayan frontier, with military standoffs recurring with troubling regularity. Yet despite this fraught backdrop, both nations have taken tentative steps toward normalisation over the past year, with India restoring direct flights, resuming business visas and approving selected Chinese investments in electronics and other sectors. These confidence-building measures suggest official channels remain open for deeper engagement if political will exists.
Mohan specifically urges New Delhi to reconsider its 2019 decision to opt out of the China-backed Regional Comprehensive Economic Partnership, citing concerns about competitive imports and potential harm to domestic agricultural interests as reasoning that now merits reexamination. He contends that participation in RCEP alongside membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership would position India as a central node within Asian supply chains rather than as a peripheral economy. This dual-membership framework would theoretically enable Indian manufacturers to access both Chinese and Western markets more effectively, deepening industrial integration while expanding export opportunities.
Crucially, Mohan acknowledges that pragmatism requires nuance rather than blanket opening. He emphasises that economic security must receive equivalent priority to national security, implicitly recognising legitimate concerns about strategic dependence on Beijing. China continues restricting exports of critical materials and technologies including rare earths, while India maintains selective investment barriers in sensitive sectors. Within this framework of managed engagement, Mohan advocates for incremental confidence-building through enhanced business travel, expanded academic collaboration and restoration of air connectivity that would facilitate the people-to-people contacts necessary for sustained commercial relationships.
For Malaysia and Southeast Asia broadly, Mohan's advocacy carries substantial implications. India's potential embrace of Asian trade integration would reshape regional supply chains and investment flows, likely redirecting manufacturing activity and creating new competitive dynamics within ASEAN. Malaysian manufacturers currently benefit from India's trade protectionism and from serving as a bridge to Western markets; deeper Indian engagement with Chinese manufacturers could alter these competitive positions. Simultaneously, if India joins RCEP and CPTPP, the region would gain a far larger consumer base and manufacturing partner, potentially accelerating regional economic growth while introducing new competitive pressures.
The adviser's framing reveals a philosophical shift within Modi's apparatus from security-centric China policy toward economically rational engagement tempered by safeguards. Whether this perspective gains political traction depends on internal bureaucratic dynamics and whether recent border stabilisation continues. Mohan's call for reconsidering RCEP rejection particularly merits attention, as Indian membership would transform the trading bloc's composition and negotiating power. However, domestic constituencies damaged by cheap Chinese imports maintain considerable political influence, suggesting that any policy reversal would proceed incrementally rather than through sudden reversal.
Mohan's advocacy ultimately reflects a calculus that economic interdependence, properly structured, can coexist with strategic caution. He argues that India's role within emerging Asian economic architectures cannot be adequately fulfilled from the sidelines, particularly as Western markets offer less dynamic growth prospects than East and Southeast Asia. The adviser frames integration not as subordination but as participation in structures that will define global commerce over the coming decade. Whether Indian policymakers heed these arguments will significantly influence the trajectory of regional supply chains and India's geopolitical positioning within Asia.
