As energy shocks from the Iran war underscore India’s fossil‑fuel vulnerability, its companies are turning to China to explore tie-ups in the electric vehicle charging, battery solutions, and renewable energy space.
For the first time in over five years, a delegation of Indian businesses visited China, according to Ranjeet Mehta, secretary general and CEO of Indian trade body PHD Chamber of Commerce & Industry. Between March 29 and April 4, eight Indian companies met Chinese firms from Shanghai, Zhejiang and Wuxi, Mehta told CNBC.
“Energy security is extremely critical for our country,” especially against the backdrop of the “problems” arising from the Middle East conflict, Mehta said.
India, the world’s third‑largest oil importer and second‑largest consumer of liquefied petroleum gas, or LPG, is heavily dependent on supplies transiting the Strait of Hormuz. Rising energy costs and supply-chain disruptions pose a considerable downside risk to the world’s fastest-growing major economy.
Six of the eight companies are startups operating in EV charging, electric trucks, battery storage and energy trading, according to the industry body.
China has developed advanced technology in renewable energy and electric vehicle charging, Mehta said, adding that “India needs those technologies.”
India aims for electric vehicles to make up 30% of total sales by 2030, but adoption is being held back by inadequate charging infrastructure and persistent range anxiety.
The Indian industry body plans to revisit China later this year with a larger delegation during the Canton Autumn Fair, a major trade exhibition in Guangzhou.
Improving ties
The visit by the Indian industry delegation marks another step in the thawing of relations between the two major economies.
“First Indian business delegation to visit China in 5+ years just wrapped up in Shanghai,” wrote Yu Jing, the spokesperson of the Chinese Embassy in India, in a post on X. “The thaw is real,” she added.
Less than a month ago, on March 11, the Indian government eased rules to allow Chinese investments into the country. These rules had been tightened since 2020, when relations soured following a deadly border skirmish in the Galwan Valley, where several Indian and Chinese soldiers died.
The recent visit by the PHDCCI delegation and the relaxation of investment rules in certain sectors are “early signs of renewed interest, though the improvement remains cautious and incremental rather than dramatic,” said Ashish Bagadia, partner, corporate finance and investment banking at BDO India.
Indian companies are “keener to form technology-transfer partnerships and JVs” with Chinese companies in India, rather than “taking significant exposure in China,” Bagadia added.
The two neighbors have been working gradually to improve ties since last year.
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After the U.S. imposed 50% tariffs on India in August last year, Indian Prime Minister Narendra Modi made his first visit to China in seven years to attend the Shanghai Cooperation Organization summit.
Since then, the two countries have taken several steps to normalize relations, including restarting flights and disengaging troops along the border.
“India recognizes it cannot be competitive in emerging technology sectors without some level of commercial engagement with China due to China’s dominance in areas such as rare earth elements, active pharmaceutical ingredients, and batteries,” Richard Rossow, senior adviser and chair on India and emerging Asia economics at CSIS, told CNBC in an email.
Rossow added that if China wants to maintain export-led manufacturing growth, “it is hard to ignore India’s growing market clout,” indicating that Beijing is also likely to match India’s enthusiasm in repairing ties.
Source: CNBC