Overview
As US foreign and trade policy continues to shift, India appears to be recalibrating its approach—not by choosing sides, but by widening its strategic options. Signs of a tentative thaw in India–China relations, alongside President Putin’s high-level visit to New Delhi, come amid a year of strain in India–US ties. Yet, despite facing some of the highest US tariffs, India’s economy has shown resilience: November export data revealed strong growth, including significant increases in shipments to both the US and China. These trends highlight India’s commitment to preserving strategic autonomy, though ongoing volatility and turbulence in its periphery could still threaten sustained economic growth.
A US, China, Russia Balancing Act
India’s long-standing policy of strategic autonomy—rooted in Cold War-era non-alignment—has evolved into a “multi-alignment” strategy as the country became a more formidable actor on the international stage. This approach seeks deep engagement with major competing powers while also strengthening ties with the Global South and middle economies. The aim is to protect national interests, maintain flexibility, and act as a constructive player in multilateral forums. This strategy is now being tested across India’s most consequential bilateral relationships, requiring New Delhi to manage competing pressures without sacrificing flexibility.
Recent strain in India-US relations has reinforced New Delhi’s mission to widen its strategic and economic partnerships. While cooperation between the two have continued in areas of mutual interest, including defense, which resulted in the signing of a ten-year defense framework, continued joint military exercises, and advanced technology cooperation, shifts in US policy have introduced significant friction into the relationship. Higher tariffs, tighter visa constraints, and sharper political messaging have taken a toll on advancing India-US trade negotiations—ongoing trade talks as recently as this month have produced no major breakthroughs. Unlike several US trading partners, India has been taken a cautious approach to negotiations, prioritizing its geopolitical interests rather than quickly accommodating US tariff demands. These trade pressures seem to have reinforced New Delhi’s pursuit to diversify its trade and diplomatic partnerships.
India’s recent engagement with China reflects its broader effort to balance relations among major powers while preserving strategic autonomy. Relations with China have eased modestly over the past year, reflecting a focus on risk management rather than deep normalization. China is India’s second-largest trading partner, with India’s manufacturing and renewable sectors heavily reliant on Chinese intermediary goods. Since January, the two powers have engaged in several high-level meetings, including Prime Minister Modi’s visit to Tianjin in late August to participate in the Shanghai Cooperation Organization (SCO)—his first visit to China in seven years. And after a five-year pause, 2025 saw direct flights between the two countries resume, India began issuing tourist visas to Chinese nationals, and China restarting the issuance of Tibet entry permits for Indian pilgrims.
Nonetheless, Beijing remains one of New Delhi’s principal competitors, with relations strained by unresolved border disputes, Tibet, China’s strong ties with Pakistan, and concerns over strategic encirclement. The limited scope of India-China cooperation was evident at the SCO: Prime Minister Modi skipped China’s Victory Day parade held shortly after the SCO, and talks with President Xi focused narrowly on economic engagement rather than resolving longstanding issues. Together, this underscores that recent India–China engagements reflect tactical stabilization and trade pragmaticism amid a period of global trade upheaval, not a fundamental shift in the bilateral relationship.
In a similar vein, despite global pressure to scale back its ties with Moscow, India has chosen to maintain engagement, neither endorsing nor condemning Russia’s invasion of Ukraine. Stability in India–Russia relations is most evident in their economic and defense ties. Russia remains India’s largest supplier of military equipment, accounting for roughly 60% of India’s current arsenal. India has also continued to purchase Russian crude oil—despite Western sanctions pressure and punitive US trade measures linked to those purchases—and has not signaled any intention to exit the Russian oil market. New Delhi has defended this policy as necessary to safeguard energy security, diversify oil imports, and capitalize on discounted pricing.
Moreover, President Putin’s visit to New Delhi earlier this month reinforced the durability of India-Russia ties. Though the meeting did not result in any landmark deals, it delivered powerful optics for both world leaders. For Moscow, the visit served as evidence that Russia maintains meaningful partnerships outside the Western bloc. And for New Delhi, it was an opportunity to demonstrate continuity in the functional aspects of the bilateral relationship and India’s commitment to preserving autonomy in its external partnerships.
Strategic Autonomy and Economic Resilience
India’s calibrated approach to major powers has proven successful as its economy continues to perform despite mounting external headwinds. India’s November export data released on Monday reveal India’s exports grew by almost 20% in November with total goods exports reaching $38.1 billion, marking its fastest growth in three years. Moreover, its trade deficit narrowed to $24.5 billion, compared to $41.6 billion in October.
Of note, despite the steep 50% tariff on Indian exports to the US, India’s exports to the US grew by 22% in November (about $7 billion). Growth in India’s exports to the US are assumed to be largely driven by goods not affected by tariffs, including electronics, pharmaceuticals, and food items. While the US remained the top destination for Indian exports, November’s data also underscored New Delhi’s accelerated push to diversifying into other markets. Shipments to China rose sharply—by over 90% in November year-over-year—while exports to Spain surged by more than 180% to nearly $900 million, alongside notable gains in other markets. This diversification is being reinforced by New Delhi’s strong push to secure free trade agreements, adding an extra buffer against tariff exposure and potential future volatility. India has also pursued a series of domestic reforms, including the simplification of its goods and services tax, tax rate cuts, and the unification of labor codes, aimed at spurring domestic consumption and encourage greater foreign business engagement.
New Delhi is currently advancing negotiations with the EU, New Zealand, and Chile. Meanwhile, recent agreements appear to already be yielding positive results: exports to the UK rose by 15% in November year-over-year following the major free trade agreement signed between the two in May. On Thursday, India signed a free trade agreement with Oman, the country’s second free trade agreement in 2025. The India-Oman deal seeks increase bilateral trade and increase India’s exports of key goods, including engineering goods, textiles, pharmaceuticals, and agricultural products. A finalized free trade agreement with the EU is expected soon, with a strong push on both sides to wrap up before India’s Republic Day on January 26.
Despite growing economic resilience, India’s strategy is not without risks. Continued delays in a US trade deal leave exporters exposed to steep tariffs in India’s largest market, while domestic confidence in current performance may reduce New Delhi’s willingness to compromise on contentious issues, such as agricultural imports. At the regional level, political and economic turbulence in neighboring Bangladesh and Pakistan poses a significant risk to sustaining India’s growth, with potential spillovers affecting logistics, supply chains, and investor confidence. More broadly, the return of great-power competition may complicate India’s multialignment strategy, as its growing status as a formidable player in the international arena may intensify pressure to choose a bloc, a decision New Delhi has long been reluctant to make. While India’s multialignment strategy reduces dependence on any single partner, its growth trajectory still faces risks from sudden policy shifts and regional turbulence.
