Context: The US Congress has backed the Lindsey O. Graham Sanctioning Russia and Iran Act, 2026, empowering the US President to impose tariffs of up to 100% on imports from major purchasers of Russian oil and gas, including India, China, Slovakia, Hungary and Azerbaijan.
- The measure reflects growing geoeconomic pressure on India over its continued engagement with Russia and highlights the risks arising from excessive dependence on any major power.
Growing US–India Geoeconomic Frictions
- The Trump administration’s economic pressure on India began earlier, including the withdrawal of Generalised System of Preferences (GSP) benefits in 2019 and subsequent tariff-related measures.
- Several threatened economic measures against India have remained unresolved, creating uncertainty in bilateral economic relations.
- While geopolitical disagreements have affected diplomatic ties, the article argues that geoeconomic measures could have a more enduring impact on the relationship.
Limits of “De-Americanisation”
- Some analysts advocate “de-Americanisation” of Indian foreign policy, and India has increasingly diversified its strategic partnerships.
- India’s hosting of the BRICS Summit, with the participation of Chinese and Russian leaders, demonstrated its willingness to engage with non-Western powers.
- However, complete distancing from the US is constrained by substantial trade, investment, technology, business and people-to-people linkages.
- The US remains an important destination for Indian goods and services exports, while Indian professionals and business communities have deep connections with the US.
- Therefore, deterioration in state-to-state relations need not automatically weaken broader societal and commercial ties.
Diversification of India’s Defence Dependence
- India’s defence relationship with the US has grown significantly, but New Delhi retains alternatives through partnerships with France, Japan, the UK, Sweden and other European countries.
- Atmanirbhar Bharat in defence seeks to reduce dependence on external suppliers through domestic production, technology development and indigenous defence capabilities.
- Diversification can reduce India's dependence simultaneously on the US, Russia and Israel, rather than replacing one external dependency with another.
- The article argues that India could gradually move away from any perception of strategic dependence on the US that emerged after the India–US Civil Nuclear Agreement.
The US–China Experience: De-risking over Decoupling
- The US–China relationship demonstrates the practical limits of complete economic decoupling between major economies.
- President Donald Trump initially advocated separating the US economy from China, and the idea subsequently gained bipartisan support in Washington.
- However, US policymakers later recognised the enormous economic costs of complete separation.
- Former US Treasury Secretary Janet Yellen argued that full economic separation would be damaging to both countries and destabilising for the global economy.
- US National Security Advisor Jake Sullivan, in a 2023 Brookings Institution speech, explicitly stated that US policy was based on “de-risking and diversifying, not decoupling” from China.
India’s De-risking Strategy
- India is similarly attempting to reduce excessive dependence across critical sectors rather than completely severing external economic relationships.
- Major areas requiring diversification include:
- Defence: multiple suppliers and domestic manufacturing.
- Energy: diversification of crude oil and gas sources.
- Trade: expanding markets and supply-chain partnerships.
- Technology and manpower: reducing excessive dependence on particular countries or ecosystems.
- The article argues that India increasingly needs to de-risk from both the US and China, unlike the US, which primarily seeks to reduce risks associated with China.
Managing a Rising China and a Relatively Declining US
- India faces the unusual strategic challenge of simultaneously managing one major power whose relative dominance is declining and another whose power is expanding.
- The historical transition from British to American predominance differed because the emerging US eventually operated within a broader Western-dominated order.
- The contemporary international system is more multipolar, with China, Russia, India, Brazil, South Africa, Iran, the European Union, Japan and Southeast Asian countries pursuing greater strategic autonomy.
- The US is expected to retain substantial military, technological and economic influence, but other major powers increasingly seek greater freedom from unilateral dependence.
Why Decoupling Is Difficult
- Economic interdependence: major economies remain connected through trade, investment, technology and supply chains.
- Strategic interdependence: countries may cooperate with a geopolitical rival where mutual interests exist.
- Global supply chains: complete separation can raise costs and disrupt production.
- Market dependence: large economies cannot easily replace important export and import markets.
- Technology and capital flows: advanced technologies, investment and skilled manpower remain internationally interconnected.
Key Concept: De-risking vs Decoupling
- De-risking: reducing vulnerabilities arising from excessive dependence while continuing beneficial economic and strategic engagement.
- Decoupling: substantially separating two economies by reducing or eliminating trade, investment, technology and supply-chain linkages.
- Strategic autonomy: maintaining sufficient policy freedom to pursue national interests without becoming excessively dependent on any major power.
Way Forward for India
- Pursue multi-alignment and strategic autonomy rather than exclusive alignment with any power bloc.
- Diversify energy imports, export markets, defence procurement and technology partnerships.
- Accelerate domestic capabilities in semiconductors, defence, critical minerals, energy and strategic technologies.
- Deepen partnerships with the EU, Japan, France, ASEAN and other middle powers.
- Preserve economically beneficial engagement with both the US and China while reducing vulnerabilities created by excessive dependence.
- Build resilient supply chains through friend-shoring, diversification and domestic capacity-building.
Conclusion: India’s emerging approach is better understood as de-risking rather than decoupling. In an increasingly multipolar world, strategic autonomy will depend not on isolation from major powers but on maintaining diversified economic and strategic options.
