April 24th, the US Vice President Vance concluded his four-day visit to India. During his visit, he not only discussed numerous issues with Indian Prime Minister Modi in New Delhi, such as US-India defense cooperation and trade agreements, but also, as the "Indian son-in-law," visited the Taj Mahal with his wife and children and attended a private wedding. Vance returned satisfied, while Modi still had to face much criticism: his "extraordinary enthusiasm" towards Vance's family caused dissatisfaction among Indian citizens, and one of the trade agreements with the US faced fierce protests from domestic farmers' groups; regarding tariff issues, although he previously showed compliance to the Trump administration, he has yet to receive the expected "return." How should we view Vance's visit to India? For "Trump 2.0," despite being described by Vance as a "tough negotiator," Modi made many concessions multiple times. What are the implications behind this? What are the views within Indian society about the current tariff war between China and the US? Around these issues, Observer Network interviewed Liu Zongyi, Director and Research Fellow of the South Asia Research Center at Shanghai Institutes for International Studies. [Dialogue/Observation Network Li Ling] Observer Network: This meeting, whether from the perspective of Modi's office or Vance's team, both sides stated that significant progress was made in the negotiations. Do you have any understanding of what specific progress there is? Liu Zongyi: I don't have insider information, but from publicly available news reports and other information, the main areas of cooperation and negotiation involved defense, energy, strategic technology, and trade. In terms of defense cooperation, the US wants to sell expensive American weapons and equipment to India. On one hand, this is to enhance India's military capabilities and use India to counterbalance China; on the other hand, it aims to influence and prevent military cooperation between India and Russia. In the energy sector, the US mainly sells oil, natural gas, and some nuclear energy equipment to India at high prices. Regarding trade negotiations, both sides reached some preliminary consensus on the terms under negotiation and formulated a trade negotiation roadmap, though I haven't seen more specific information yet. Strategically speaking, the cooperation discussed may cover multiple fields including chip production and key mineral resource production. For example, the US wants to assist India in finding key mineral resources like rare earths and produce them in India before providing them to the US. Additionally, they aim to strengthen strategic cooperation in key technologies such as weapon networks, chip technology, and advanced quantum communication. Over the past decade, the most significant cooperation between the US and India has been in the defense sector. These developments are actually the refinement and advancement of the series of agreements reached during Modi's visit to the US in February with Trump. [Image: https://p3-sign.toutiaoimg.com/tos-cn-i-axegupay5k/f7a6dd3abb1c449f99a8c081112e46f7~tplv-tt-origin-web:gif.jpeg?_iz=58558&from=article.pc_detail&lk3s=953192f4&x-expires=1746234701&x-signature=KZeN8P%2BGLsLuHmA63gFrNeiMw6s%3D] [Caption: Modi holds Vance's son on his lap.] Observer Network: In terms of trade negotiations, I saw reports from both the US and India mentioning that the Trump administration pressured the Modi government to further reduce tariffs on American agricultural products entering the Indian market. Liu Zongyi: Trump indeed mentioned India's agricultural tariff issue multiple times, but Indian farmers are very sensitive to agricultural product and agricultural import negotiations, so the Modi government may face significant challenges. American agricultural products such as corn and wheat are produced through industrialized methods, resulting in lower costs. Once imports are liberalized, it will severely impact India's agriculture. After all, India is still primarily an agrarian country, and Indian farmers may be forced to reduce planting areas, which will dampen their production enthusiasm. In India, farmers hold considerable power, especially those in Punjab. Over the past few years, the Modi government has attempted several agricultural reforms, leading these farmers to march on New Delhi multiple times. Since the farmers' votes are crucial for the BJP, the Modi government has ultimately compromised each time. Therefore, the Modi government may be very cautious in agricultural negotiations and may find it difficult to reach an agreement with the US. [Image: https://p3-sign.toutiaoimg.com/tos-cn-i-tjoges91tu/40cd036920f748830c1e57e6253efe73~tplv-tt-origin-web:gif.jpeg?_iz=58558&from=article.pc_detail&lk3s=953192f4&x-expires=1746234701&x-signature=lDpi%2BdHZCWz21JKFqVxXhNThgfI%3D] [Caption: April 21, 2025, Hyderabad, India. Farmers protest against the visit of US Vice President Vance. Photo by AP.] Observer Network: In response to Trump's tariff threats, the Modi government has shown a relatively "compliant" attitude but hasn't received special favors; contrary to Modi's expectations, the US later even threatened to impose drug tariffs, causing great anxiety among Indian generic drug exporters. After the strategy of concessions and goodwill failed, did the Modi government adjust its strategy? Liu Zongyi: Facing Trump 2.0, the Modi government has mainly adopted a compliant stance. In February after Trump took office, Modi proactively visited the US to "pay respects" to Trump and made significant concessions in many of Trump's demands. Regarding the situation where the US increases tariffs on India, the Modi government has stated that it would retaliate, but the actual actions taken were extremely minimal. The retaliation was more symbolic in nature. The fundamental goal was to hope to reach a bilateral free trade agreement with the US, thereby gaining benefits and rising to prominence amidst the chaos of the current global order collapse and trade disorder. In fact, over the past ten years, India's strategic core has been to take advantage of chaos and rise in times of disorder, aiming to achieve the goal of becoming a major power. India envisages sacrificing the interests of other countries, particularly China's, to reach bilateral free trade agreements with developed economies like the US, Europe, and Japan, promoting the "Make in India" initiative, and thus achieving economic takeoff. This is its strategic goal. Therefore, although Sino-Indian relations have improved somewhat in recent years, particularly since last October, India's ambition to surpass and replace China remains unchanged, and its thinking of viewing China as a sacrificial lamb and stepping stone for its own economic takeoff has never changed. Observer Network: You just mentioned that India believes it can "step on" China to take advantage of chaos and rise in times of disorder. How do Indian public opinion circles view China being subjected to exorbitant tariffs by the US? Liu Zongyi: When Trump announced tariffs on the world, especially significantly increasing tariffs on China, Indians were very pleased, especially people like Indian Commerce Minister Piyush Goyal, who openly claimed that this was another "once-in-a-lifetime opportunity" for India. In fact, the phrase "once-in-a-lifetime opportunity" has been mentioned by me at least three times in just a few years. The first instance was in 2018 when Trump first launched the trade war against China, they believed that "the once-in-a-lifetime opportunity had come," intending to vigorously develop "Made in India." At that time, the Indian government specifically set aside an area equivalent to Luxembourg, introduced preferential policies, actively lobbied over 1,000 large multinational corporations, and urged them to relocate their supply chains from China to India. The second instance occurred after the outbreak of the pandemic in 2020. At that time, Son of Indian Foreign Minister Subrahmanyam Jaishankar also put forward the view that "the once-in-a-lifetime opportunity had come." He believed that after the pandemic, a major adjustment in the global order would inevitably occur, and the opportunity India faced this time was comparable to the development opportunities encountered by the US in the 1940s and 1950s and China in the 1980s and 1990s, which was a once-in-a-lifetime opportunity for India's industrialization. Then now, Trump in his second term made crazy moves to increase tariffs on the entire world, and the Indian commerce minister again shouted "the once-in-a-lifetime opportunity had come." They believe that this is still a once-in-a-lifetime good opportunity to promote the transfer of global supply chains to India and help India achieve industrialization. Observer Network: You just mentioned that they set aside a large piece of land in 2018 and actively persuaded multinational enterprises to transfer their supply chains to India. Nearly seven years have passed since then, how much of their vision has been realized? Liu Zongyi: Overall, India's manufacturing development shows a "point breakthrough" characteristic, meaning significant progress has been made in a few industries, such as smartphones, toys, and pharmaceuticals; however, progress in many other industries has been relatively slow. Nevertheless, comprehensively speaking, India's manufacturing industry has achieved certain results. [Image: https://p3-sign.toutiaoimg.com/tos-cn-i-tjoges91tu/14f72a058e4d39a7e32702fdd0f6ae76~tplv-tt-origin-web:gif.jpeg?_iz=58558&from=article.pc_detail&lk3s=953192f4&x-expires=1746234701&x-signature=OYCuizfynkuIOreMhZ31flEt5U4%3D] [Caption: 2018 report: "Samsung built the 'world's largest' mobile phone manufacturing plant in Noida, India."] Observer Network: Manufacturing has developed somewhat, but why does its proportion in India's GDP show a downward trend overall? It has already dropped to around 14%. Liu Zongyi: When Modi first came to power, he proposed a target to raise the proportion of manufacturing in India's GDP to 25%. However, the reality is that the proportion of manufacturing has not risen but decreased, dropping from about 17% when he first came to power to the current level—there are differences in statistics, some say it has dropped to around 14%, others say 12% or 13%. However, if we look at the total output of manufacturing, since India's GDP as a whole is increasing, according to the corresponding ratio calculation, the total output of India's manufacturing is actually growing, just at a much slower rate than other industries. The key reason behind this is that investments from Western countries in India are mainly concentrated in the service sector—the tertiary industry. Under this push, India's service sector has developed rapidly, maintaining a long-term share of around 60% in GDP. Against the backdrop of the rapid expansion of the service sector, the proportion of manufacturing in GDP naturally decreased. Observer Network: Regarding supply chain shifts, if the US maintains high tariffs on China—whether the exaggerated 245% or the currently circulating tiered plan, the tariff amounts far exceed the tariffs Trump imposed on India—do you think this difference will prompt more Chinese companies to build factories in India? Liu Zongyi: Even if the US reduces tariffs on China to fifty or sixty percent, it will still be very difficult for businesses to operate, as many companies' profit margins may not reach that level. From the voices reflected in India's mainstream media, most Indian media harbor deep hostility toward China, filled with tones of schadenfreude. Against this backdrop, we see India hyping up related topics. Before Trump imposed tariffs, India had already imposed stringent conditions on Chinese investment, such as requiring localization of Chinese employees, especially mandating that management positions must be held by Indians, strictly limiting Chinese equity stakes, and demanding technology transfers from Chinese companies. Now, India's standards have become even stricter, and Chinese companies have had no choice but to "bow down." According to them, after Trump imposed additional tariffs again, some Chinese companies, under pressure, voluntarily lowered their standards for joint ventures with India. One Chinese company is negotiating to sell 51-55% of its Indian business, originally only willing to sell 26%; another Chinese company is willing to form a joint venture with Tata's subsidiary in India with a lower equity stake. In India's view, this is the so-called "once-in-a-lifetime opportunity," and they intend to take advantage of this opportunity to attract Chinese companies to invest, hoping to gain Chinese capital and technology without cost. From the perspective of corporate behavior, capital is inherently profit-driven, and it is difficult to expect all capital, especially private capital, to consider politics or patriotism unless there are strict constraints—private enterprises' primary goal is survival, and it is hard to demand too much from them; however, for some state-owned enterprises, I believe they should consider politics, and the state can adopt stricter management standards. [Image: https://p3-sign.toutiaoimg.com/tos-cn-i-tjoges91tu/53f2d1b20b3dcd65e5884e8ac3c8d04b~tplv-tt-origin-web:gif.jpeg?_iz=58558&from=article.pc_detail&lk3s=953192f4&x-expires=1746234701&x-signature=GG6KD7EmRLjO8bA3brs41nok300%3D] [Caption: A worker at a Chinese enterprise's factory in India performing welding work. Photo: Bloomberg.] Observer Network: In recent years, Xiaomi, vivo, and other Chinese companies' experiences in India have provided ample risk warnings. Based on your understanding, have Chinese enterprises improved their strategies in mitigating risks? Liu Zongyi: Recently, I noticed that Yiwu Small Commodity Market has adopted a cash-on-delivery trading method for Indian merchants, meaning they require immediate payment upon delivery. Aside from this, there are few other transaction security measures available. For example, some suggest seeking legal redress, but the reality is that India has many problems in the legal sphere. Legal procedures are extremely lengthy, and laws are often altered to meet their own interests, with the retroactive period of the amended laws sometimes lasting decades. Therefore, regarding the Indian market, I believe a "short, flat, and fast" business model is more suitable. Don't expect our Chinese enterprises to dominate the Indian market; this is impossible. Because the Brahmins and Banias and other castes control a large amount of political resources and state machinery—if China's officialdom does not directly confront these forces, the interests of Chinese enterprises in India will be difficult to ensure. To sum up, for Chinese enterprises, the best strategy in the Indian market is to focus on short-term, quick, and flexible trade activities, earn some profits, and then leave, rather than thinking about long-term, large-scale investments. [Image: https://p3-sign.toutiaoimg.com/tos-cn-i-tjoges91tu/TVhclbhBRMKeyG~tplv-tt-origin-web:gif.jpeg?_iz=58558&from=article.pc_detail&lk3s=953192f4&x-expires=1746234701&x-signature=3ws7C68JLK4p%2FKlSfIhiEJYjoQY%3D] [Caption: This article is an exclusive article of the Observer Network, and the content purely reflects the author's personal opinions, unrelated to the platform. Unauthorized reproduction is prohibited, and legal liability will be pursued. 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