Rakesh Mohan, a part-time member of Prime Minister Narendra Modi's Economic Advisory Council, has made a striking case for India to recalibrate its relationship with Beijing by substantially increasing Chinese investment and participation in Asia's economic architecture. Speaking in an interview on Thursday, July 16, Mohan argued that India must move beyond protectionist reflexes and instead harness its competitive advantages in labour-intensive manufacturing to attract capital from China, positioning the country as a destination for investors seeking to diversify away from traditional manufacturing hubs.
The timing of these remarks carries considerable weight. Mohan's intervention arrives as the geopolitical landscape undergoes profound realignment, with President Donald Trump's administration pursuing tariff-heavy trade policies that have begun to cast doubt on the United States' commitment to predictable, rules-based economic engagement. For policymakers in New Delhi grappling with long-term strategic planning, this apparent American unreliability creates both risks and opportunities—risks because India has long anchored much of its foreign policy around partnership with Washington, and opportunities because it opens space for New Delhi to pursue a more balanced, Asia-centric economic strategy.
Mohan's specific recommendations focus on attracting Chinese manufacturers to establish operations in India's labour-intensive sectors, particularly textiles, garments, footwear and furniture. He emphasizes that India's current economic relationship with China is fundamentally imbalanced, with Indian markets flooded with Chinese imports while Indian exports remain comparatively negligible. By inviting Chinese capital and expertise into these sectors, Mohan suggests India could simultaneously create employment opportunities for its vast workforce, develop export-oriented manufacturing capacity, and begin to correct the substantial trade deficit that currently characterises the bilateral relationship. The adviser calls for a detailed audit of Chinese import categories to identify precise areas where Indian producers might successfully compete with strategic investment and technology transfer.
This position represents a notable departure from the defensive posture India has adopted toward Chinese capital flows since the deadly border clashes of 2020. When Indian and Chinese troops engaged in violent confrontation along their contested Himalayan frontier, New Delhi responded by significantly tightening scrutiny of Chinese investment proposals, effectively closing the door to capital inflows from Beijing across most sectors. That hardening of stance had roots extending further back, including India's deliberate exclusion from the China-backed Regional Comprehensive Economic Partnership in 2019, a decision driven by domestic political concerns that cheaper Chinese and other Asian imports would destabilise Indian manufacturers and agricultural communities already facing competitive pressures.
Yet the past year has witnessed incremental warming in bilateral relations. India has restored direct commercial flights between the two countries, resumed issuing business visas for Chinese professionals, and conditionally approved select Chinese investments in strategic sectors such as electronics manufacturing. These moves suggest that New Delhi's security establishment has begun distinguishing between security concerns and economic isolationism, recognising that strategic rivalry need not preclude mutually beneficial commercial engagement. Mohan's intervention essentially argues for pushing this thaw considerably further, framing economic pragmatism as entirely consistent with vigilant protection of national interests.
The scale of India's current economic dependence on Chinese goods underscores Mohan's central argument about the necessity of deeper engagement. India imported more than $130 billion of Chinese goods in the fiscal year ending March, a figure that reflects both the efficiency of Chinese manufacturing and the limited availability of comparable alternatives for many categories of goods. According to Mohan, this reality makes strategic decoupling impossible and economic isolation counterproductive. Instead, he argues, India should accept this interdependence as a foundation for building more balanced and mutually beneficial commercial relationships that might eventually reduce the current trade deficit.
Crucially, Mohan frames his advocacy for deeper China engagement not as abandonment of Western partnerships but rather as necessary diversification in an era of American unpredictability. He explicitly advocates that India continue pursuing free-trade agreements with established Western partners including the United States while simultaneously deepening its integration into Asian supply chains and regional economic structures. This vision presents India not as choosing between Washington and Beijing but rather as positioning itself to capture opportunities across multiple economic zones as the centre of global economic gravity continues shifting eastward.
His most controversial recommendation concerns India's rejection of RCEP and his suggestion that New Delhi should reconsider this decision. When India initially opted out of the China-backed multilateral trade pact, the decision reflected genuine apprehensions about import surges that might harm domestic constituencies. However, Mohan argues that participation would facilitate India's deeper integration into Asian manufacturing networks, ultimately strengthening India's own productive capacity and export competitiveness. He also advocates for India's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, viewing these memberships as essential to ensuring Indian manufacturers can access premium Western markets while remaining embedded within Asian production networks.
The broader strategic implication of Mohan's position concerns India's place within emerging Asian economic architecture. Rather than maintaining defensive isolation from Chinese-led initiatives, this approach suggests India might better serve its economic interests by participating actively in regional structures while maintaining appropriate safeguards for sensitive sectors and national security interests. For Southeast Asian nations watching these developments closely, India's potential shift toward greater economic integration with China carries significant implications for regional supply chains, trade flows, and the broader competitive dynamics of Asian manufacturing.
Mohan's framing of this strategy around "economic security" rather than pure cost-benefit analysis reveals sophisticated thinking about managing tensions between openness and protection. He acknowledges that China continues restricting exports of critical materials and rare earth elements while India maintains certain investment limitations, suggesting his vision involves negotiated reciprocal opening rather than unilateral liberalisation. This more nuanced approach distinguishes his position from naive advocates of blanket deregulation, instead presenting a case for strategic, sequenced, and reciprocal deepening of economic ties.
The adviser also emphasises the importance of people-to-people exchanges, expanded academic collaboration, and increased business travel as complementary elements of this broader reorientation. These softer dimensions of engagement create networks and relationships that can facilitate commercial partnerships while building understanding across societies often separated by mutual suspicion and limited direct contact. By treating economic engagement as inseparable from cultural and educational exchange, Mohan's framework suggests that India's deepening China ties need not represent merely transactional commercial calculation but rather a broader civilisational engagement.
For Malaysian and Southeast Asian observers, Mohan's intervention signals potential shifts in India's regional economic strategy with direct implications for ASEAN and the broader Indo-Pacific. If India does eventually reconsider RCEP participation or pursue deeper integration into Asian supply chains, it could reshape regional manufacturing patterns, investment flows, and competitive dynamics. The positioning of India as a potential alternative to China within Asian supply chains might also face recalibration if New Delhi itself becomes more integrated with Chinese manufacturing networks rather than serving as a counterweight to Beijing's economic dominance.
Ultimately, Mohan's case for pragmatic deepening of India-China economic ties represents an important intellectual challenge to the security-first framework that has dominated New Delhi's policy responses since 2020. Whether India's political leadership ultimately embraces this vision depends on calculus involving not only economic considerations but also domestic political pressures and security concerns that extend far beyond Mohan's economic expertise. Nevertheless, his articulation of a coherent alternative framework suggests that India's approach to China remains contested terrain where different strategic visions continue competing for influence.
