New Delhi Seeks New Partners

Welcome to the Audere Atlas, the Audere Group’s fortnightly update on global geopolitical trends, how we engage with them, and what they mean for your organisation. 

This week we examine India’s multi-alignment challenge in an era of hardening global blocs. After years of deepening ties with the US, the easing of Sino-Indian tensions, new trade frictions with Washington, and public displays of diplomacy with Moscow have complicated New Delhi’s foreign policy calculus. What is emerging is not a reversal but a recalibration of India’s long-standing strategy of balancing between major powers.  

The Audere Atlas offers timely, actionable insights that both support key decision-making and highlight areas for further exploration and understanding. 

The Bottom Line

US–India ties have hit a post–Cold War low after Washington’s imposition of a 50% tariff on Indian imports. This has prompted visible diplomatic warmth between New Delhi, Beijing and Moscow, but India’s long-term tilt to the US will likely survive this blip intact. The near-term story is turbulence in trade, energy and supply chains; the strategic story is India hedging harder, rather than switching camps.
 
The Brief

On 6 August 2025 the United States announced a sweeping tariff increase on Indian imports, raising the rate to 50% across multiple categories. The tariff, which entered into force on 27 August, was formally linked to India’s sustained imports of discounted Russian crude since the invasion of Ukraine in 2022. New Delhi immediately condemned the move as “unfair and unreasonable” and has argued that it reflects political pique as much as energy concerns. (Trump’s decision also came against the backdrop of India’s refusal to validate President Trump’s claim that he had settled a “nuclear conflict” during the India–Pakistan stand-off of May 2025.) In particular, Indian officials point to the fact that China bought even larger volumes of Russian oil last year but was subject to a lighter tariff.  
 
Energy lies at the centre of this dispute. Since early 2022, Russia has become India’s largest single supplier of crude, meeting more than one-third of its oil demand. With domestic consumption climbing steadily, Indian ministers have reaffirmed their intention to keep buying Russian barrels. Moscow, which relies on oil and gas for roughly 25% of federal revenues, has continued to sweeten discounts to lock in Indian demand.  
 
The timing of the tariff coincided with a conspicuous round of summit diplomacy. At the Shanghai Cooperation Organisation gathering in Tianjin (31 August–1 September 2025), Prime Minister Modi met both President Xi and President Putin. Xi called for India and China to be “partners not rivals,” while Modi spoke of a “new atmosphere of peace and stability” and pledged to resume suspended air links. Modi and Putin meanwhile issued a joint statement describing their relationship as a “strategic partnership.” Photographs of the three leaders together ran widely in the Chinese and Russian press, reinforcing US irritation. Yet analysts note that the SCO remains a largely symbolic forum; India’s military standoff with China in Ladakh, Beijing’s growing influence in the Indian Ocean, and Chinese support for Pakistan’s defence sector all constrain the scope of genuine rapprochement. 
 
India’s dealings with both China and Russia, while valuable, are fraught with structural imbalances. The graphics below show India’s deficits with both partners, highlighting India’s reliance on imports of Chinese machinery/chemicals and Russian oil, with limited reciprocal exports, within the $452 billion trade triangle. In 2023, Chinese exports to India totalled $125 billion—dominated by machinery, electronics and chemicals—against just $18.1 billion flowing the other way. Russia’s exports to India were worth $66.1 billion, nearly 90% of them oil and gas, while India managed only $4.1 billion in return sales, mainly chemicals and machinery. By contrast, the United States is India’s single largest export market, taking $81.4 billion in goods (17.9% of total exports), led by pharmaceuticals, precious stones, machinery and textiles.

^{Figures 1 & 2: India’s Trade Relationships visualised: Al Jazeera}

The economic repercussions of the tariffs in India were immediate. The rupee dropped to a record intraday low of ₹88.33 per US dollar on 1 September, while the BSE Sensex and NSE Nifty 50 indices fell modestly on tariff implementation day. Indian business associations warn that leather, textiles and shrimp exporters are particularly exposed, with the latter sector sending two-thirds of output to the US. Economists estimate that the tariffs could shave 0.9 percentage points from 2025–26 GDP growth, which had previously been projected at 6.5%. Prime Minister Modi has announced new domestic reforms and an acceleration of trade negotiations with the EU, Gulf states and ASEAN to cushion the blow. 

Europe has sought to capitalise on the rift. EU leaders, following their September 2025 foreign ministers’ meeting, proposed drafting a joint EU–India agenda for 2026 and praised India’s outreach to Kyiv. Germany in particular has pressed to revive stalled talks on an EU–India free trade agreement. But these too may soon run into complications. The EU has introduced new rules (adopted in July 2025) banning from January 2026 imports of refined fuels produced in third countries using Russian crude. This will stymie India’s lucrative exports of diesel to Europe, much of which is refined from Russian-origin oil. 

So What?

India’s outreach to Beijing and Moscow is best understood as tactical hedging rather than a wholesale strategic realignment. The underlying strategic architecture remains: China is the principal long-term security threat, the US is the indispensable technology and defence partner, and Russia is a vital energy supplier and legacy arms provider. What has changed is India’s willingness to signal flexibility in order to widen its options. In short, India’s foreign policy is entering a rebalancing phase rather than a realignment. 

Investors should plan for political turbulence rather than structural decoupling. Localising more production inside India, qualifying for government incentives, and diversifying customer portfolios toward Europe and Asia will help mitigate risks. The US will remain India’s key export destination and strategic partner, but periodic trade and visa frictions will recur, with implications for US-based companies with Indian employees.  

For business, the immediate-term implications of tariffs are significant. Companies using India as a supply hub must assume tariff-induced volatility in the US market will persist for at least 12–18 months. This calls for careful modelling of cost structures under a 50% tariff regime, particularly in sensitive product categories, and the development of alternative export channels. The EU’s 2026 refined-fuels regulation also means that Indian petro-products will face far stricter traceability requirements in the medium term, creating compliance and certification challenges. Finally, exposure to Russia-related transactions brings added compliance burdens. Energy trades, shipping contracts and financial transactions tied to Russian oil are already attracting heightened European scrutiny.  

Audere Group can support businesses in managing these risks. Strategic advisory can model tariff and sanctions scenarios, enabling firms to map vulnerabilities across supply chains. Enhanced due diligence and sanctions screening helps clients assess exposure to Russian-linked intermediaries. Supply-chain fraud investigations and monitoring can ensure compliance with EU provenance rules, especially in energy and petrochemicals. Market-intelligence due diligence can guide firms as they shift focus toward Europe and the Gulf, while litigation and asset tracing services provide tools to recover losses from disrupted contracts.  

The bottom line for business is that India will continue to hedge more visibly between Washington, Moscow and Beijing, but its fundamental trajectory is unlikely to shift. In the short term, companies must prepare for volatile trade relations, diversify market exposure, and strengthen compliance capabilities to manage the growing intersection of sanctions, tariffs and energy politics. 

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_{Disclaimer: The content of this report is for informational purposes only and does not constitute legal or financial advice. For further details or specific inquiries, please reach out to our team directly.}