This week, Indian Prime Minister Narendra Modi will pay his first visit to China in seven years. It is noteworthy that during this trip, he intends to meet with Chinese President Xi Jinping and Russian President Vladimir Putin. This historic meeting comes amid a significant downturn in India’s relations with the United States. At the same time, India is deeply looking for new partnerships and diversifying its trade relationships.
In recent months, India has reversed course on its once-growing collaboration with the U.S. This partnership, anchored in technology and a mutual desire to counter China’s global ambitions, has been strained by U.S. tariffs and India’s continued purchase of Russian oil. The U.S. has responded by more than doubling those tariffs on Indian exports to 50%. This move is especially impactful for India’s largest export market, valued at $86.5 billion annually. Approximately four-fifths of these exports, or about $56.5 billion, are now subject to tariffs of their own.
As India confronts these challenges, it has pursued alternatives with zeal to strengthen its economy. At the same time, the Indian government has initiated an export drive focusing on 40 countries, especially to improve its textile trade. Officials emphasize their commitment to maintaining ties with the U.S. while recognizing the necessity of diversifying partnerships to safeguard national interests.
Modi’s visit this month to China highlights a measured thaw in relations between the two Asian giants. India, meanwhile, is badgering China for more investment and technology transfer. This move follows India’s efforts to capitalize on its impressive deposits of rare earths that are used in industries from smartphones to solar panels. Unfortunately for India, without adequate technology to mine and process these resources at scale, it stands little chance of taking advantage of them.
Japanese investment in India has doubled. Indeed, they have committed to spending as much as ¥10 trillion, roughly $68 billion, in the coming 10 years. Suzuki Motor has committed about $8 billion to strengthen its position there. This $110 billion commitment will be made over the next five to six years.
As such, Indian officials are keenly aware of the current geopolitical high wire act. One official remarked that India “cannot afford to appear as though it is giving in to U.S. pressure on oil imports, or anything else that could be construed as a capitulation,” noting that public anger is high in response to these developments.
The growing tension between India and the U.S. has certainly not escaped the eye of pundits. Michael Kugelman, a leading expert on South Asia, underscored that “Indian trust in the U.S. is blown to smithereens.” His other big point of concern was whether anybody here in the United States really gets how deep this erosion of trust goes. He added that Modi’s visit occurs at a pivotal moment when “India-China relations are stabilizing and India-U.S. relations have gone south,” creating a powerful visual for the global audience.
Manoj Kewalramani further underscored what these shifting alliances mean. “No doubt there are some in China who are revelling in the trade tensions between India and the U.S.,” he stated, underscoring the complexities of the current geopolitical climate. He further remarked that “an effort is under way to see if India and China can reach some sort of new equilibrium,” suggesting that both nations may benefit from establishing a more stable relationship, despite historical mistrust.
There are still hurdles to clear, but Kewalramani is hopeful. If there are no major breakthroughs, he says that as long as Delhi and Beijing can figure out a level of stability and predictability, they can find practical gains for both sides.