Rakesh Mohan, a part-time member of Prime Minister Narendra Modi's Economic Advisory Council, has made a striking case for India to substantially recalibrate its economic relationship with China. Speaking in an interview on Thursday, Mohan argued that New Delhi should actively court Chinese manufacturers and capital, positioning India's competitive labour costs as a magnet for investment in labour-intensive sectors such as textiles, garments, footwear and furniture production. This represents a notable departure from India's protectionist posture of recent years, signalling that at least some influential policymakers within the Modi administration see pragmatism rather than confrontation as the path forward in Sino-Indian economic relations.
The adviser's comments gain particular significance given India's recent history with Beijing. Following the deadly border clashes of 2020, New Delhi had substantially tightened its scrutiny of Chinese investment, implementing regulatory barriers that reflected deep geopolitical suspicion. Even before those military confrontations, India had pointedly declined to join the China-backed Regional Comprehensive Economic Partnership, or RCEP, a decision that reflected domestic concerns about being overwhelmed by cheaper Chinese imports. That Mohan now advocates for India to reconsider such positions suggests a shift in how some elements of the Indian establishment weigh strategic concerns against economic pragmatism.
Mohan grounded his argument in India's trade realities, noting that the country currently imports more than $130 billion worth of goods annually from China while exporting very little in return. Rather than attempting to insulate the domestic economy through protectionist measures, he suggested India should examine precisely what China imports and identify sectors where Indian manufacturers could feasibly compete. This analytical approach reframes the China relationship from a defensive crouch to an offensive posture, one where India might gradually transform its role from passive consumer to active supplier within Chinese supply chains.
Crucially, Mohan framed his recommendations within the broader context of shifting global geopolitics, explicitly arguing that the United States has become "a lot more unreliable" as an economic partner due to volatile trade policies. This assessment reflects growing scepticism in certain Indian policy circles about the durability of American commitments. President Donald Trump's tariff regimes have demonstrated that Washington's trade policies can shift dramatically with political winds, creating uncertainty for long-term economic planning. For policymakers in New Delhi seeking stable, predictable partnerships, this volatility presents a genuine challenge to strategies built on deepening Western economic integration.
The adviser also emphasised that economic security and national security operate on parallel planes rather than in opposition. In Mohan's framing, deliberately impoverishing India's engagement with the world's largest manufacturing economy could paradoxically weaken the nation by limiting growth, job creation and technological advancement. This represents a subtle but important philosophical shift—one that views measured economic engagement with China as compatible with, rather than corrosive to, India's broader strategic interests. Such thinking may gradually reshape how Delhi weighs its approach to technology transfer restrictions and investment controls.
Mohan's intervention carries weight beyond rhetorical significance because of his professional background. As a former Deputy Governor of the Reserve Bank of India, he possesses substantial credibility on economic matters within Indian policy circles. His advocacy for deeper integration with China comes from someone whose institutional position requires engagement with practical economic realities rather than ideological posturing. The former central banker's emphasis on pragmatism suggests this perspective may resonate with technocratic elements within the Modi government who prioritise growth metrics and employment creation.
Turning specifically to regional trade architecture, Mohan urged India to reconsider its 2019 decision to remain outside RCEP, arguing that the bloc represents a pathway to deeper integration within Asian supply chains. He further recommended that India pursue membership in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, another regional trade mechanism. Joining both arrangements, in his view, would strengthen India's manufacturing base, facilitate export opportunities to Western markets and position the country more competitively within the broader Asian economic ecosystem—a region Mohan identified as the locus of global economic growth over the coming decade.
The practical implications of such moves for Malaysian and Southeast Asian observers warrant consideration. If India genuinely shifts toward deeper participation in regional trade blocs and increased openness to Chinese investment, it could reshape regional supply chain dynamics. Indian manufacturing might become more integrated into East and Southeast Asian production networks, potentially creating both competitive pressures and collaboration opportunities for Malaysian manufacturers across various sectors. Additionally, Indian participation in RCEP could alter the agreement's character and negotiating dynamics going forward.
Mohan's remarks also reflect recent positive developments in Sino-Indian relations, including the restoration of direct flights, resumption of business visas and Indian approval of selected Chinese investments in electronics and other sectors. These practical measures suggest that despite the symbolic weight of the 2020 border conflict, both countries have recognised mutual benefits in selective economic reopening. The adviser's public endorsement of this trajectory appears designed to provide political cover for further moves in this direction, framing pragmatic engagement as strategic rather than capitulatory.
However, Mohan acknowledged persistent tensions within the relationship. China continues to restrict exports of critical materials and rare earths, while India maintains various investment and business restrictions. This suggests his advocacy for engagement operates within a realistic framework acknowledging asymmetries and continuing strategic competition. His call for easing restrictions on business travel, expanding academic collaborations and increasing people-to-people exchanges indicates a belief that familiarity and economic interdependence, over time, can gradually reshape the tenor of bilateral relations.
The adviser's case ultimately rests on a conviction that India's long-term prosperity and regional position depend on integration within Asian supply chains and markets rather than isolation through protective barriers. Whether this perspective gains traction within Indian policymaking circles remains to be seen, but Mohan's prominence suggests it represents more than the marginal view of a lone reformer. His intervention signals that serious debate within India's economic establishment continues regarding the optimal balance between strategic caution and pragmatic engagement with Beijing.
