The recent China-India disengagement agreement, finalized on October 21, was brought into focus again on December 3, when External Affairs Minister S. Jaishankar detailed its provisions in the Indian Parliament. While the deal is a step toward easing tensions along the Line of Actual Control (LAC), it is not a straightforward resolution. Instead, it reflects the complex two-level game India must navigate, balancing domestic demands with global strategic imperatives.
The nature of China-India relations has always oscillated between conflict, competition, and cooperation. The conflictual side has been quite apparent since the June 2020 Galwan Valley clash – the first fatal encounter since 1975 – which resulted in the death of 20 Indian soldiers and at least four Chinese troops.
Following this, relations between New Delhi and Beijing came to a halt. Political trust eroded, troops amassed along the LAC, and the Indian government imposed several strict measures, including curbing Chinese investments, banning numerous Chinese apps, including the popular TikTok app, and slowing visa processing. These moves reflected India’s firm stance and Prime Minister Narendra Modi’s hardline approach on national security but carried significant repercussions for domestic business interests.
With several rounds of diplomatic and military leaders level talks, the disengagement agreement initially appeared to offer a path out of this deadlock. However, it has been received with skepticism, with concerns about being “lulled into a false sense of security.” Jaishankar sought to address these doubts in Parliament, providing details about the arrangement. He stated that in the current agreement on Depsang and Demchok, both sides have agreed “to ensure patrolling as in the past to the relevant patrolling points, as well as the resumption of grazing by our civilians as per longstanding practice.” He also reiterated that “the maintenance of peace and tranquility in border areas is a pre-requisite for the development of our ties.”
Observers have scrutinized the deal. For example, Ananth Krishnan pointed out that while Jaishankar mentioned steps like creating de-militarized zones, limited non-patrolling zones, and the relocation or withdrawal of posts, the government avoided using the commonly employed term “buffer zone,” likely to avoid implying a sense of permanence. Tanvi Madan noted that this is “not a return to the status quo ante.” Moreover, the opposition says that it is unclear how the new patrolling and grazing terms compare to previous practices or whether the buffer zones at other friction points will endure.
While questions persist about whether the agreement signifies substantive progress or a tactical pause in a broader strategic contest, it undeniably opens a pathway to more normalized ties.
What drove this agreement after nearly five years? I argue that the agreement illustrates what international relations scholars call a two-level game, where domestic and international pressures shape foreign policy outcomes.
On the domestic front, Indian businesses, particularly those dependent on Chinese imports, have been vocal about the need to stabilize relations. Although the Indian government imposed several restrictions post-Galwan, trade between the two countries flourished. In 2023-24, China emerged as India’s largest trading partner, with $118.4 billion in bilateral trade. However, this growth also widened India’s trade deficit.
Businesses reliant on Chinese raw materials and skilled technicians bore the brunt of strained ties. For example, India imports 70 percent of its active pharmaceutical ingredients (APIs) from China, a dependency exposed during the COVID-19 pandemic. Likewise, domestic business organizations such as the Federation of Indian Export Organizations (FIEO) and the All-India Association of Industries (AIAI) urged the government to relax visa restrictions on Chinese technicians, which were tightened after the Galwan incident, arguing that their absence was causing delays in manufacturing.
In response, the Ministry of Commerce and the Ministry of Electronics and Information Technology (MeitY) advocated for limited entry of Chinese professionals to mitigate manufacturing delays, particularly in sectors reliant on Chinese machinery and skilled workers.
For that matter, through the Annual Economic Report Chief Economic Adviser V. Anantha Nageswaran further urged the government to focus on direct investment-led policies to address the trade deficit.
Apart from domestic pressure, internationally, India faces the challenge of maintaining autonomy in a volatile global order, particularly following Donald Trump’s reelection to the U.S. presidency. His campaign promises, such as imposing 60 percent tariffs on all imports from China and 100 percent tariffs on countries moving away from the U.S. dollar, have raised concerns for global supply chains.
His aggressive stance on de-dollarization has also put BRICS countries, including India, on notice. Analysts like C. Raja Mohan argue that while Trump’s threats against a hypothetical BRICS currency may seem premature, his determination to reshape the global economic order demands India’s careful attention.
During Trump’s previous term, U.S. policy toward China oscillated between aggressive containment and strategic ambiguity, leaving India to manage its border tensions largely on its own. Even under the Biden administration, despite deepened India-U.S. ties, New Delhi remains cautious about over-reliance on any single partner.
The disengagement agreement reflects India’s broader strategy of maintaining strategic autonomy while avoiding prolonged conflict with its largest, closest, and most contentious neighbor.
However, the question is if India is conceding too much. The decision to disengage without explicit guarantees or even hopes of de-escalation from China could be interpreted as a tactical retreat. Jaishankar’s emphasis on mutual respect and sensitivity underscores the need for vigilance, but will this agreement set a precedent for future negotiations, or will China view India’s willingness to disengage as a sign of pragmatism rather than weakness?
To ensure this deal is not a Pyrrhic victory, India must strengthen on-ground verification mechanisms, enhance troop readiness, and leverage multilateral platforms to address border issues. Domestically, economic engagement with China cannot come at the expense of strategic caution. Business pressures for normalization are understandable but must not overshadow broader national security imperatives.
Ultimately, the disengagement agreement encapsulates the complexities of India’s foreign policy landscape. Managing the dual pressures of domestic economic interests and international strategic considerations will require clarity and resolve. Whether this deal marks the beginning of a stable peace or a temporary truce depends on India’s ability to balance these competing priorities effectively.