The Arbitrary Arena: Navigating India's Strategic Autonomy Amidst Volatile US Transactionalism and the Sino-Russian Pivot

Executive Summary

As of January 16, 2026, India stands at a critical geopolitical crossroads. The diplomatic landscape between India and the United States has evolved from what was once characterized as a "predictable partnership" into what can only be described as a high-stakes "transactional arena." This transformation, catalyzed by revelations from US Commerce Secretary Howard Lutnick regarding trade negotiations that allegedly faltered due to a missed personal phone call between Prime Minister Narendra Modi and President Donald Trump, represents far more than diplomatic protocol—it signals a fundamental recalibration of how major powers engage in the emerging multipolar order.

This comprehensive analysis examines India's current security and economic challenges across multiple dimensions: its delicate positioning within the Russia-India-China (RIC) framework, the implications of US tariff policy, India's assumption of the BRICS 2026 chairmanship, its emerging role in global artificial intelligence governance, and its strategic engagement with semiconductor supply chain resilience through initiatives like Pax Silica. The essay employs the "Moving Basket" metaphor to characterize US foreign policy volatility under the current administration and explores how India is leveraging multilateral platforms—particularly BRICS, the G20, and the upcoming AI Impact Summit—to assert strategic autonomy while maintaining essential partnerships.

 

I. The "Missed Call" Controversy: Trade as Personal Validation and Sovereign Assertion

I.i. The Lutnick Revelation and India's Response

In early January 2026, Commerce Secretary Howard Lutnick's statements at a Hi-Tech Summit and on the All-In Podcast created significant diplomatic turbulence. Lutnick claimed that while technical terms for a US-India trade deal were ready, the agreement stalled because PM Modi did not personally call President Trump to "close" the deal. According to Lutnick's account, Washington subsequently prioritized trade agreements with Indonesia, Vietnam, and the Philippines, while India faced what became characterized as punitive tariffs.

However, Indian officials have disputed Lutnick's account of the trade negotiations. India's Ministry of External Affairs spokesperson Randhir Jaiswal emphasized that the two countries had "on several occasions been close to a deal," signaling that responsibility for the impasse did not rest solely with New Delhi. This pushback represents more than diplomatic face-saving—it reflects India's determination to establish that its foreign policy decisions are made on the basis of strategic calculation rather than personal diplomacy or deference to great power expectations.

I.ii. The Tariff Architecture: Layered Coercion

President Donald Trump signed an executive order in August to place an additional 25% tariff on India for its purchases of Russian oil, bringing the combined tariffs imposed by the United States to a steep 50%. This two-tiered tariff structure—25% baseline plus 25% penalty for Russian oil purchases—reveals the Trump administration's strategy of using trade policy as a comprehensive tool of geopolitical leverage.

Furthermore, in January 2026, the U.S. approved a bill allowing tariffs of up to 500% on imports from countries that continue buying Russian oil, including India. This represents the largest potential spike in duties and marks a dramatic escalation in economic coercion. Senator Lindsey Graham stated the bill would give President Trump "tremendous leverage against countries like China, India and Brazil to incentivize them to stop buying the cheap Russian oil that provides the financing for Putin's bloodbath against Ukraine".

The result has been tangible economic impact. According to available data, India's exports to the US declined by approximately 8.58% in late 2025 due to these measures, affecting key sectors including textiles, leather goods, gems and jewelry, and manufactured products that had previously enjoyed relatively favorable access to American markets.

I.iii. The India-Pakistan Context: Sovereignty Over Mediation

The trade tensions are compounded by the aftermath of the May 2025 border conflict, known as Operation Sindoor. President Trump claimed on social media to have averted nuclear war by threatening to stop trade with both India and Pakistan. However, PM Modi publicly countered this narrative in a 35-minute phone call in June 2025 and later in Parliament, stating categorically: "No world leader asked us to stop the operation." Modi clarified that the ceasefire resulted directly from military-to-military communications following Pakistan's request, not from US mediation.

This assertion of sovereign decision-making likely contributed to what has been characterized as a "bruised ego" within the US administration. For an administration that views foreign policy through a transactional lens where personal relationships between leaders determine outcomes, India's insistence on factual accuracy regarding its military decisions represented a rejection of the narrative framework the White House sought to establish. The subsequent tariff escalation can be interpreted, at least partially, as retaliation for this perceived lack of deference.

II. The "Referee" Analogy: The Arbitrary Nature of Modern Trade Governance

The current US approach to trade diplomacy can be understood through an extended sports metaphor—specifically, a basketball game where the referee (the United States) possesses not merely the authority to call fouls, but the power to manipulate the fundamental physics of the court itself.

II.i. Raising and Lowering the Posts

The US arbitrarily adjusts tariff rates mid-negotiation, making the "goal" of a finalized trade agreement perpetually receding for players who do not follow specific, often unwritten, protocols. The threat of 500% tariffs on Russian oil purchasers under the Sanctioning Russia Act of 2025 exemplifies this dynamic—the posts are raised so high that scoring becomes functionally impossible unless one abandons strategic priorities (in this case, energy security through Russian oil imports).

II.ii. The Extra Ball: Secondary Sanctions

The sudden introduction of secondary sanctions operates like throwing an additional ball onto the court while the game is in progress. India must now play two simultaneous games: one focused on bilateral trade terms with the US (tariff rates, market access, intellectual property protections), and another centered on maintaining strategic autonomy in foreign policy (particularly regarding Russia, Iran, and Venezuela). Success in one game increasingly requires sacrifice in the other, creating impossible choices for policymakers.

II.iii. Changing the Team Size

By finalizing trade agreements with Vietnam, Indonesia, and the Philippines while India remained at the negotiating table—and doing so at reportedly more favorable terms—the US effectively changed the competitive landscape. India now faces not only direct bilateral competition with the US market but also indirect competition from regional rivals who secured preferential access. This dynamic forces India to compete on multiple fronts simultaneously, diluting its negotiating leverage and market positioning.

II.iv. Resilience Through Necessity

Despite these erratic conditions, India continues to engage with the US economic relationship because the stakes remain existential. The US remains India's largest trading partner, with bilateral trade reaching $191 billion, and American markets provide crucial outlets for India's IT services, pharmaceuticals, textiles, and engineering goods. This reality demonstrates a resilience born not of preference but of structural economic interdependence—India cannot afford to walk away from the game, regardless of how arbitrarily the rules are applied.

III. Strategic Recalibration: The Complex Russia-India-China Triangle

III.i. India-Russia: The "Special and Privileged Strategic Partnership"

India and Russia upgraded their relationship from a strategic partnership to a special and privileged strategic partnership in 2010. This designation reflects historical ties dating to the Cold War era and encompasses multiple dimensions of cooperation.

Defense Cooperation: Russia remains India's largest defense supplier, though this dominance has declined as India diversifies. The most important pillar of bilateral relations is defense cooperation, and Russia is a "proven and tested" partner, providing Delhi with advanced defense equipment and sensitive military technologies. India has placed orders for five S-400 missile systems worth $5 billion from Russia, alongside joint production programs including the BrahMos cruise missile, Sukhoi Su-30MKI fighter jets, and KA-226T helicopters.

Energy Security: China bought nearly half of Russia's crude oil exports in November, while India took about 38 percent of exports. Despite facing a potential 500% tariff threat from the US, India has maintained its Russian oil imports because energy security trumps the risk of American economic sanctions. The December 2025 Summit between Putin and Modi reaffirmed that energy and defense cooperation would continue regardless of Western pressure.

Logistics and Military Access: Russia ratified the Reciprocal Exchange of Logistics (RELOS) agreement with India in early December, granting each country's troops, ships and aircraft logistical access to the other's facilities. This agreement enables more frequent joint exercises and potentially positions Indian forces for operations in the Arctic and Russian Far East while allowing Russian military presence in the Indian Ocean Region.

III.ii. India-China: Cautious Thaw Amid Structural Rivalry

Five years after their last major border clash, relations between China and India have improved markedly. This improvement, however, must be understood as tactical rapprochement rather than strategic reconciliation.

Economic Pragmatism: New Delhi has stated that it would be open to more investment from China, in limited sectors. Following US tariff hikes, Chinese diplomats signaled warming ties, recognizing a mutual interest in hedging against American unpredictability. If the US market becomes prohibitively expensive due to tariffs, Chinese markets and supply chains represent a vital alternative for Indian manufacturers and exporters.

Persistent Structural Obstacles: Despite economic incentives for cooperation, fundamental security concerns remain. The 3,488-kilometer disputed border, China's strategic encirclement of India through influence over neighboring countries (Pakistan, Nepal, Sri Lanka, Myanmar), and competing visions for regional leadership in Asia create enduring friction. Both countries would benefit from stronger economic ties, but structural obstacles persist at the security and strategic levels.

The SCO Context: The recent Shanghai Cooperation Organization summit in Tianjin provided a platform for India-China engagement, but the optics of engagement between China, India and Russia have done little to alleviate the fault lines that exist between the three countries. Handshakes and photo opportunities mask deeper strategic divergences.

III.iii. The RIC Framework: Opportunity and Limitation

The Russia-India-China (RIC) framework has emerged as a potential counterweight to Western-dominated institutions, yet it remains fundamentally constrained by mutual suspicions.

India's Nightmare Scenario: India's nightmare scenario is a close Sino-Russian relationship of the kind that existed prior to the 1966 split. Modern India's only wartime defeat came in 1962, when the Soviet Union sided with Beijing rather than New Delhi. For Russia to serve as the continental counterweight India requires, Moscow cannot become a China-dependent regional power.

Russia's Balancing Act: China has deep insecurity over Russia-India ties, and is much tempted to use its influence over war-ravaged Russia to drive the relationship in a direction beneficial to China's interest. However, China recognizes that undermining Russia-India relations could push India closer to the United States, which would be strategically counterproductive for Beijing.

Managed Trilateralism: The RIC framework thus operates as a limited coordination mechanism rather than a genuine alliance. All three parties engage tactically to maximize leverage in their respective relationships with the United States, but none are prepared to sacrifice core interests for trilateral cohesion.

IV. Opportunities and Dependencies: India's Structural Position

IV.i. The Difficulties

Economic Squeeze and Manufacturing Ambitions: High US tariffs threaten India's aspiration to become a global manufacturing hub capable of rivaling China. The "Make in India" campaign, designed to attract foreign investment in manufacturing, loses competitiveness when Indian goods face 50% tariffs in the world's largest consumer market.

Technology Exclusion: While India possesses significant software and IT services capabilities, it remains dependent on Western technology for cutting-edge semiconductors, advanced manufacturing equipment, and certain categories of defense systems. USTR has noted concerns about India's intellectual property regime, including "the potential threat of patent revocations," high levels of copyright piracy, inadequate IP enforcement, and weak legal protections of trade secrets.

Initial Pax Silica Exclusion: When Pax Silica was initially launched, India was notably left out of the nine-nation coalition. Experts said India's exclusion reflected current gaps in capabilities central to Pax Silica's objectives, including India's lack of cutting-edge semiconductor and advanced manufacturing technologies, as well as its limited role as a supplier of critical minerals. This exclusion highlighted India's vulnerability in critical technology supply chains.

IV.ii. The Opportunities

Trade Diversification Acceleration: US behavior has accelerated India's pursuit of strategic autonomy through diversified trade partnerships. India has signed or is finalizing free trade agreements with the UK, UAE, Australia, and the European Free Trade Association (EFTA). Most significantly, India and the European Union are preparing to finalize a major trade pact by January 27, 2026, as broader FTA negotiations near conclusion.

The India-EU Pivot: EU Commission President Ursula von der Leyen, alongside European Council President António Costa, is expected to sign the agreement with Indian Prime Minister Narendra Modi during a New Delhi visit between January 25 and 27, 2026. The EU is India's largest trading partner for goods, with bilateral trade of $136 billion. The FTA is expected to benefit Indian textiles, pharmaceuticals, engineering goods, IT services, and other sectors by reducing tariff barriers and improving regulatory alignment.

Critically, the push to finalize the FTA has gained momentum amid rising protectionism, including US tariffs that have reached levels of up to 50 percent in certain sectors. The agreement positions India as a predictable alternative to an increasingly volatile United States for European businesses seeking stable partnerships.

Global South Leadership and BRICS Chairmanship: From 1 January 2026, the BRICS chairmanship officially passed from Brazil to India. For the first time, India, one of the founding members of the group, will lead the expanded format, which now includes 10 countries. The expanded BRICS includes Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran, the UAE, and Indonesia as full members, with Belarus, Bolivia, Kazakhstan, Cuba, Malaysia, Nigeria, Thailand, Uganda, and Uzbekistan as partner countries.

External Affairs Minister S Jaishankar said the theme for India's chairmanship—"Building for Resilience, Innovation, Cooperation and Sustainability"—highlights the need to strengthen capacities, promote innovation and ensure sustainable development for all. India will host the 18th BRICS Summit in 2026, coinciding with the forum's 20th anniversary, providing a high-profile platform to assert leadership of the Global South.

V. The Artificial Intelligence Dimension: India's Strategic Opportunity in 2026

V.i. The Global AI Race and Unequal Distribution

Artificial Intelligence is projected to add $15.7 trillion to the global GDP by 2030, but North America, China, and Europe are estimated to capture over 84 percent of these gains. This concentration of AI benefits risks entrenching new technological hierarchies, with the Global South potentially relegated to passive consumers rather than active developers and deployers of transformative AI technologies.

V.ii. India's AI Impact Summit 2026

India is positioning itself as a champion of inclusive and democratic AI governance through the India AI Impact Summit scheduled for February 19-20, 2026 in New Delhi. The Ministry of Electronics and Information Technology, through the IndiaAI Mission, outlined India's vision for inclusive and democratic artificial intelligence, emphasizing that AI must function as a horizontal, enabling technology accessible to countries worldwide, with equitable access to compute, data, and models.

Summit Framework: The India AI Impact Summit 2026 is anchored in three guiding Sutras—People, Planet, and Progress—operationalized through seven thematic Chakras (working groups) ranging from Human Capital and Safe & Trusted AI to Democratizing AI Resources and AI for Economic Growth and Social Good.

Global Participation: Global technology and AI leaders such as Nvidia founder and CEO Jensen Huang, OpenAI founder and CEO Sam Altman, Google and Alphabet CEO Sundar Pichai, DeepMind CEO and co-founder Demis Hassabis, and Microsoft co-founder and philanthropist Bill Gates will be present for the February Summit. This level of participation signals recognition of India's growing importance in shaping global AI governance frameworks.

IndiaAI Mission: The Indian government approved the IndiaAI Mission in March 2024 with a budget of ₹10,371.92 crore (approximately $1.25 billion) over five years. The mission aims to build a robust AI ecosystem, promoting innovation and ensuring that technology serves every section of society, from creating world-class research hubs to developing homegrown AI models.

V.iii. BRICS and AI: A Platform for Global South Coordination

India's upcoming BRICS presidency and India-AI Impact Summit can function as platforms to channel collective intent into structured cooperation through joint investments, partnerships, and capacity-building initiatives. By combining its BRICS chairmanship with hosting the AI Impact Summit, India is creating a unique opportunity to define AI governance principles that reflect the priorities, constraints, and development models of emerging economies.

This approach contrasts sharply with AI governance frameworks emerging from Western institutions, which often prioritize issues such as copyright, liability, and labor displacement over questions of technology access, compute sovereignty, and development-oriented deployment that are paramount for the Global South.

V.iv. Domestic AI Implementation

India has effectively addressed AI challenges by implementing AI solutions across healthcare, agriculture, and public service delivery to over 1.4 billion citizens. This practical experience in deploying AI at scale in resource-constrained environments provides India with credibility when advocating for inclusive AI development models.

More than a third of Indian IT companies are using artificial intelligence for 40% of their core operations, and almost all (97%) expect work to be done by teams made up of humans and AI by 2027. This rapid adoption, however, also presents challenges. The Indian government's policy think tank, Niti Aayog, reported in October that "supply for AI talent is now 50% of the current demand in India and is expected to further lag in the next few years", highlighting the urgency of skills development alongside technological deployment.

VI. Semiconductor Sovereignty and Pax Silica: The Hardware Foundation of Strategic Autonomy

VI.i. India's Semiconductor Manufacturing Breakthrough

January 2026 marks a historic inflection point for India's technology ecosystem. As of January 13, 2026, the global technology landscape has reached a historic inflection point as India officially entered the elite circle of semiconductor-producing nations with the commencement of full-scale commercial production at the Micron Technology assembly and test facility in Sanand, Gujarat.

Simultaneously, the neighboring Tata Electronics mega-fab in Dholera successfully initiated its first high-volume trial runs, focusing on mature 28nm, 50nm, and 55nm nodes with a planned capacity of 50,000 wafers per month. While these are not cutting-edge nodes (Taiwan and South Korea produce 3nm and 5nm chips), they represent the essential workhorses for automotive, telecommunications, and consumer electronics industries—precisely the sectors where India seeks to establish manufacturing competitiveness.

VI.ii. From Pax Silica Exclusion to Invitation

The initial exclusion of India from Pax Silica was a diplomatic setback that highlighted India's gap in semiconductor capabilities. However, this situation reversed dramatically in mid-January 2026. US Ambassador to India Sergio Gor stated that India would be invited to join Pax Silica as a full member next month, adding that "while trade is very important for our relationship, we will continue to work closely together on other very important areas such as security, counterterrorism, energy, technology, education and health".

Strategic Significance of Pax Silica: Pax Silica is a US-led strategic initiative focused on AI, semiconductors, and technology supply chain security, seeking to reduce global dependence on any single country for critical technologies and ensure that advanced computing infrastructure is developed within a trusted network. The initiative brings together the United States, Japan, South Korea, Singapore, Netherlands, United Kingdom, Israel, United Arab Emirates, and Australia—countries that collectively control critical nodes of the global chip and AI value chain.

Why India's Inclusion Matters: For the US, India offers scale, a growing talent pool, and strategic depth. For India, Pax Silica provides access to trusted technology networks, coordinated investments, and deeper integration with advanced manufacturing ecosystems. Structured membership gives India a formal seat at the table where process nodes, standards and collaborative investments are discussed, while also unlocking and de-risking large semiconductor and advanced manufacturing investments by providing investors with a coherent framework of rules, protections and political backing.

VI.iii. The Geopolitical Stakes of Silicon

India's formal integration into the US-led Pax Silica framework has cemented the country's status as a democratic alternative to traditional manufacturing hubs, ensuring that the physical infrastructure of the digital age is not concentrated in a single, vulnerable region. This development is inextricably linked to the AI race—control over chip manufacturing increasingly determines which nations can deploy AI at scale, maintain data sovereignty, and avoid technological dependence on geopolitical rivals.

However, accepting the invitation to Pax Silica will hard-wire new dependencies and constraints into India's strategic and regulatory choices. The challenge for Indian policymakers is converting this opportunity into a balanced arrangement that brings capital, capability, and influence without sacrificing strategic autonomy or domestic policy flexibility—particularly regarding relationships with Russia and China.

VII. Strategy for 2026: Multilateral Hedging and Offensive Diplomacy

VII.i. The G20 and BRICS: Playing on Multiple Courts

India has learned from US volatility that dependence on any single partnership—no matter how economically significant—creates unacceptable vulnerability. Consequently, India is pursuing what can be characterized as "multilateral hedging": actively cultivating multiple forums where it can exercise influence and shape agendas.

BRICS 2026 Priorities: The four priorities of India's chairship—resilience, innovation, cooperation and sustainability—will guide work across BRICS' political, economic and people-to-people pillars. Jaishankar emphasized a people-first and inclusive vision, stating that India approaches its chairship with a humanity-first and people-centric approach inspired by Prime Minister Modi's guidance.

Notably, India will seek to renew its Global South credentials through its BRICS chairmanship by presenting a non-Western worldview—but not explicitly anti-Western—likely downplaying contentious areas such as de-dollarization (which has incurred Trump administration wrath) and reframing this as a push to settle trade in national currencies. This careful balancing reflects India's recognition that it cannot afford to completely alienate Western partners while asserting leadership of the Global South.

G20 Coordination: India will also seek some alignment with the US G20 presidency, attempting to bridge divides between Western and non-Western economic governance visions. Whether India can successfully execute this balancing act remains uncertain, particularly as other BRICS members like China, Russia, and Iran have historically been more willing to directly challenge US preferences.

VII.ii. Trade Resilience Funds and Economic Safeguards

Academic analyses from institutions such as the Center for Strategic and International Studies (CSIS) and the Observer Research Foundation (ORF) suggest India will leverage the G20 platform to formalize "Trade Resilience Funds" with EU and Global South partners. These mechanisms would create safety nets for micro, small, and medium enterprises (MSMEs) affected by "Trump Tariffs," effectively building alternative economic architecture where the US is one player among many rather than the dominant referee.

This represents a shift from defensive adaptation to offensive strategy-building. Rather than simply absorbing tariff shocks, India is constructing institutional frameworks that reduce the leverage any single economy can exercise through trade restrictions.

VII.iii. Leveraging the Quad vs. BRICS: Strategic Competition Among Partnerships

India is signaling that its continued participation in the Quadrilateral Security Dialogue (Quad)—which includes the United States, Japan, and Australia—is contingent on meaningful technology transfers and equitable partnerships. Simultaneously, its BRICS leadership provides a platform to challenge US dollar dominance in trade settlements, creating a "threat" designed to bring Washington to more reasonable negotiation terms.

This strategy of playing competing multilateral frameworks against each other reflects sophisticated diplomatic calculation. India is demonstrating that it has options and that American assumptions about India's strategic dependence on Western partnerships can no longer be taken for granted.

VIII. The Current State of US-India Trade Negotiations: Cautious Optimism Amid Ongoing Tensions

VIII.i. Signs of Progress

Despite the turbulence of recent months, there are indications that trade negotiations are advancing. India's Commerce Secretary Rajesh Agrawal stated that the first tranche of the India-US bilateral trade agreement is "very near," though the government cannot put a deadline for the deal. US Ambassador Sergio Gor indicated that India and the US are actively engaged on a bilateral trade agreement, with the next call scheduled for January 13.

Commerce and Industry Minister Piyush Goyal said India has completed six rounds of discussions covering both a Bilateral Trade Agreement and an interim arrangement to lower tariffs, with reasonable expectation that an interim agreement could be reached to reduce steep tariffs on a majority of Indian exports to the US.

VIII.ii. The "Very Near" Ambiguity

The repeated characterization of the deal as "very near" without concrete timelines reflects the inherent uncertainty in negotiations with the Trump administration. Commerce Secretary Agrawal stated: "There are engagements going on, and negotiating teams are talking virtually on issues which are still pending. But we can't put a deadline. It's very near. That will happen as long as both sides are ready, they feel it is the right time to announce".

This diplomatic language masks significant remaining obstacles, including disagreements over Russian oil purchases, agricultural market access, intellectual property protections, and data localization requirements. The lack of a concrete timeline suggests that both sides recognize the fragility of any potential agreement and are reluctant to create expectations that could collapse under the weight of political pressures or presidential tweets.

VIII.iii. Energy Trade as Persistent Friction Point

Energy trade has been described as a bone of contention in deal talks, with the Trump administration wanting more shipments to come to India. However, the Commerce Secretary noted that India imports over 80 percent of its energy needs and has been buying from traditional suppliers, largely the Middle East, though imports from the US have also increased.

This highlights a fundamental asymmetry: the US wants India to purchase more American oil and gas while simultaneously threatening tariffs if India continues purchasing Russian oil. For India, energy security requires diversification across multiple suppliers rather than dependence on any single source, regardless of geopolitical preferences. This structural tension is unlikely to be resolved through diplomatic compromise alone.

IX. Dependency Assessment: Degree and Direction of Strategic Relationships

IX.i. Economic Dependencies

US Dependence: India remains significantly dependent on the United States for:

• Technology access, particularly in semiconductors, advanced manufacturing equipment, and certain software platforms
• Capital markets access and foreign direct investment, with US firms being major investors in Indian technology startups
• Export markets, with the US being India's single largest export destination
• Defense technology in specific categories, including aerospace and naval systems

EU Dependence: With the India-EU FTA approaching finalization, Europe is positioned to become an even more critical economic partner, potentially rivaling or exceeding the US in trade significance. The EU offers:

• Alternative export markets with potentially more stable regulatory environments
• Technology cooperation without the geopolitical strings attached to US partnerships
• Investment capital seeking alternatives to China amid European supply chain diversification

China Interdependence: Despite security tensions, economic ties with China remain substantial:

• India imported $101.7 billion from China in 2023-24, making China its largest import source
• Critical dependence on Chinese goods in pharmaceuticals (active pharmaceutical ingredients), electronics components, and industrial machinery
• Supply chain integration that cannot be easily or quickly unwound

IX.ii. Energy Dependencies

India's dependence on the West for energy has significantly diminished. Russian oil constituted approximately 42% of India's total imports in mid-2025, demonstrating that India has successfully diversified away from exclusive dependence on Middle Eastern and Western energy sources. This shift provides India with negotiating leverage that was previously absent.

IX.iii. Defense Dependencies

While Russia remains India's largest defense supplier, India has actively diversified:

• Increased purchases from Israel, France, and the United States
• Development of indigenous defense production capabilities through initiatives like "Make in India" for defense
• Technology transfer agreements with multiple partners to reduce long-term dependence on any single supplier

This diversification strategy reflects the lessons of 1962 and 1971: dependence on a single defense supplier creates strategic vulnerability when that supplier's interests diverge from India's during crisis moments.

X. The "Missing Call" as Strategic Signal

PM Modi's decision not to make the personal phone call that Commerce Secretary Lutnick claimed would have "closed" the trade deal was likely not an oversight but a calculated strategic choice. It signaled several critical messages:

Rejection of Client-State Status: India will not subordinate its foreign policy to the personal validation requirements of any world leader, regardless of economic incentives or threats. Sovereignty in decision-making is non-negotiable.

Assertion of Institutional Process: Trade agreements should be concluded through professional negotiations based on mutual benefit, not through leader-to-leader personal diplomacy that creates dependencies on individual relationships rather than institutional frameworks.

Demonstration of Alternatives: By refusing to play according to the expected script, India demonstrated that it has alternative partnerships (EU, BRICS, bilateral arrangements with Persian Gulf states and Asian economies) and is not desperate enough to sacrifice diplomatic dignity for economic access.

Long-term Strategic Positioning: India is signaling to the international community that it operates according to principles of strategic autonomy and multi-alignment rather than alignment with any single bloc or power. This positioning is essential for maintaining credibility as a leader of the Global South.

XI. Risks and Vulnerabilities in the Current Strategy

XI.i. Economic Costs of Tariffs

The 50% tariff structure, if sustained, could significantly damage Indian export competitiveness in the US market. The approximately 8.58% decline in exports in late 2025 may be only the beginning if alternative markets cannot absorb displaced production. MSMEs, which lack the resources to quickly pivot to new markets or absorb tariff costs, face existential threats.

XI.ii. Technology Access Restrictions

Initial exclusion from Pax Silica highlighted a genuine gap in India's technological capabilities. While the subsequent invitation is positive, India's first commercial fabrication venture from the Tata Group is expected to produce 50,000 wafers per month by early 2026, but China operates 44 fabs with 22 more under construction, while South Korea has 21 operational units. This scale disadvantage will persist for years, creating ongoing vulnerability to technology access restrictions by advanced economies.

XI.iii. BRICS Cohesion Challenges

Despite its expanded membership and India's 2026 chairmanship, BRICS faces fundamental cohesion challenges:

• Deep strategic rivalry between India and China over border disputes, regional influence, and competing visions for Asian leadership
• Divergent economic models and development priorities among member states
• Lack of institutional depth compared to Western-led frameworks like the G7 or EU
• Questions about enforcement mechanisms for collective decisions

If BRICS cannot demonstrate tangible benefits to member states beyond symbolic opposition to Western dominance, India's leadership year may fail to translate into enduring influence.

XI.iv. The Rupee Internationalization Challenge

President Trump warned BRICS nations in late November 2024 against creating a new currency or backing any alternative to the US dollar, threatening 100% tariffs on countries that undermine dollar dominance. Any significant Indian push for rupee internationalization or BRICS payment mechanisms could trigger severe US economic retaliation, creating a dilemma between Global South leadership aspirations and economic pragmatism.

XI.v. Balancing Act Sustainability

India's strategy of playing multiple partnerships against each other—Quad vs. BRICS, US vs. EU vs. China, Russia vs. Western defense suppliers—requires exceptional diplomatic skill and favorable external conditions. If forced to make definitive choices during a crisis (such as a major India-China border confrontation or a Taiwan crisis), this balancing act could collapse rapidly, leaving India isolated or forced into unwanted alignments.

XII. Opportunities for Strategic Advancement in 2026

XII.i. The Window for India-EU FTA Finalization

The anticipated signing of the India-EU FTA between January 25-27, 2026 represents a generational opportunity. If successfully implemented, this agreement could provide:

• Tariff reductions on key Indian exports including textiles, pharmaceuticals, engineering goods, and IT services
• Regulatory harmonization that reduces compliance costs for Indian exporters
• A signal to global investors that India offers stable, predictable access to major markets beyond the volatile US relationship
• Leverage in future negotiations with the US, demonstrating that India has viable alternatives

XII.ii. Semiconductor Ecosystem Development

With Micron's Gujarat facility operational and Tata's Dholera fab in trial production, India has a 12-18 month window to demonstrate manufacturing competitiveness before global investment attention shifts elsewhere. Success in this window could attract subsequent waves of investment from global semiconductor companies seeking to diversify beyond Taiwan and South Korea.

Pax Silica membership, if formalized, could accelerate this process by providing:

• Coordinated investment frameworks that reduce political risk for multinational corporations
• Technology sharing arrangements that compress the learning curve for Indian manufacturers
• Standards harmonization that ensures Indian production is compatible with global supply chains

XII.iii. AI Governance Leadership

The India AI Impact Summit in February 2026 creates a platform for India to position itself as the voice of the Global South in AI governance discussions. If India can articulate a coherent framework that balances innovation with inclusion, security with openness, and development with safety, it could establish itself as a bridge between Western AI governance models and the needs of emerging economies.

This leadership would be particularly valuable as AI regulation accelerates globally. The European Union's AI Act, expected to be fully operational in 2026, China's evolving AI governance framework, and emerging US regulations create a fragmented landscape where a unified Global South perspective could carry significant weight.

XII.iv. BRICS Currency and Payment System Evolution

Despite Trump's threats, there is substantial momentum toward alternative payment mechanisms. India can play a pivotal role in designing these systems to emphasize trade settlement in national currencies rather than explicit de-dollarization rhetoric. This framing could reduce US hostility while still achieving the practical objective of reducing dollar dependency in bilateral trade relationships.

The key is constructing mechanisms that serve practical trade finance needs—reducing transaction costs, speeding settlements, avoiding exchange rate volatility—rather than explicitly challenging dollar hegemony as a geopolitical objective.

XIII. Comparative Analysis: India's Position Relative to Other Emerging Powers

XIII.i. India vs. Indonesia, Vietnam, Philippines

The fact that Indonesia, Vietnam, and the Philippines secured trade deals with the US while India faced escalating tariffs raises important questions about comparative positioning.

Advantages of Southeast Asian Competitors:

• Smaller economies that pose no potential challenge to US regional dominance
• Less complex geopolitical entanglements (no major power rivalry with China comparable to India's)
• Willingness to accept terms that India considers incompatible with strategic autonomy

India's Distinctive Position:

• Population scale (1.4 billion) and economic size ($3.7 trillion GDP) that makes it impossible to ignore long-term
• Democratic political system that aligns with stated US values, unlike Vietnam
• Existing defense and technology cooperation frameworks that Southeast Asian nations lack

India's challenge is leveraging these structural advantages while managing the near-term costs of refusing subordination.

XIII.ii. India vs. China

China's experience with US trade confrontation offers both warnings and lessons for India.

Parallel Challenges:

• Both face US technology restrictions designed to limit advancement in cutting-edge sectors
• Both are attempting to build alternative payment and trade settlement mechanisms
• Both are major Russian oil purchasers facing US sanctions pressure

Critical Differences:

• China has achieved far greater manufacturing scale and technological depth, making complete decoupling economically devastating for the West
• China operates within an authoritarian political system that enables rapid resource mobilization but lacks India's democratic credentials
• China faces coordinated Western pressure (including from Europe and Japan) that India has so far avoided

Strategic Implications: India cannot replicate China's pathway because it lacks comparable manufacturing scale and state capacity for directed industrial policy. However, India benefits from not facing the same degree of Western unity in opposition. India's strategy must therefore emphasize differentiation—positioning as a democratic, transparent alternative to Chinese manufacturing—rather than imitation.

XIII.iii. India vs. Brazil

Both India and Brazil are major emerging economies leading BRICS (Brazil concluded its chairmanship in December 2025, passing to India in January 2026), but their strategic contexts differ significantly.

Brazil's Advantages:

• Geographic distance from major power competition zones
• Resource abundance (particularly in agriculture and minerals) that reduces vulnerability to trade disruptions
• Smaller defense requirements due to absence of hostile neighbors

India's Distinctive Challenges:

• Contested borders with two nuclear-armed neighbors (Pakistan and China)
• Position at the intersection of multiple strategic theaters (Indian Ocean, Central Asia, Southeast Asia)
• Higher technology import dependence

Strategic Implications: India cannot pursue Brazil's model of relatively relaxed strategic hedging because its security environment demands more active balancing and closer attention to defense relationships.

XIV. Scenario Planning: Alternative Futures for India's Strategic Position

XIV.i. Scenario A: "Strategic Reconciliation with Washington"

In this scenario, a combination of successful trade negotiations, renewed Quad momentum, and Pax Silica integration pulls India closer to the US-led security and economic architecture.

Enabling Conditions:

• US accepts that India will maintain Russian energy ties for national security
• Technology transfer arrangements through Pax Silica deliver meaningful industrial benefits
• China escalates border tensions, pushing India toward firmer US alignment

Consequences:

• India sacrifices some BRICS leadership credibility
• Deepened technology dependencies on Western ecosystems
• Potential for substantial economic gains through preferential US market access
• Vulnerability to shifts in US domestic politics

XIV.ii. Scenario B: "Eurasian Pivot"

In this scenario, escalating US tariffs and technology restrictions push India toward deeper engagement with Russia, China, and the broader Eurasian Economic Union.

Enabling Conditions:

• India-China border situation stabilizes through negotiated settlement
• Russia offers preferential energy pricing and defense technology arrangements
• US-India trade war intensifies beyond recovery

Consequences:

• Loss of access to cutting-edge Western technology
• Reduced foreign direct investment from US and European sources
• Greater influence within BRICS and Shanghai Cooperation Organization
• Heightened security risks if Russia becomes too dependent on China

XIV.iii. Scenario C: "True Multi-Alignment" (Most Likely)

In this scenario, India successfully maintains productive relationships with multiple power centers while refusing subordination to any single framework.

Enabling Conditions:

• India-EU FTA delivers promised economic benefits, reducing US dependency
• Semiconductor manufacturing achieves competitiveness, demonstrating indigenous capability
• BRICS produces tangible coordination mechanisms without demanding exclusive loyalty
• US recognizes that attempting to force India's exclusive alignment is counterproductive

Consequences:

• Persistent diplomatic complexity requiring constant balance management
• Reduced economic efficiency due to navigating multiple regulatory frameworks
• Enhanced negotiating leverage from credible alternatives
• Leadership credibility among non-aligned nations

This scenario aligns most closely with India's historical strategic culture and current policy trajectory.

XV. Policy Recommendations for Indian Decision-Makers

XV.i. Near-Term (2026)

Prioritize India-EU FTA Implementation: Ensure the anticipated January 27 signing is followed by rapid ratification and implementation. Early wins in European market access can demonstrate the viability of alternatives to US dependency.

Maximize BRICS Chairmanship Impact: Use the 2026 summit to deliver tangible coordination mechanisms—trade finance facilities, payment settlement systems, research collaboration frameworks—rather than merely symbolic declarations. Success will be measured by whether member states commit resources to joint projects.

Formalize Pax Silica Participation: Accept the invitation but negotiate clear terms regarding technology access, investment commitments, and constraints on other partnerships. India should avoid a repeat of the Quad experience, where expectations exceeded deliverables.

AI Summit Deliverables: The India AI Impact Summit must produce concrete outcomes—potentially a Global South AI Development Fund, commitment to open-source AI model development, or frameworks for responsible AI deployment in resource-constrained environments. Avoid the trap of high-profile participation without substantive results.

XV.ii. Medium-Term (2026-2028)

Accelerate Semiconductor Ecosystem Development: The current Micron and Tata facilities must be starting points, not endpoints. India needs to attract at least three additional major fab investments and build domestic equipment and materials supply chains to achieve genuine resilience.

Defense Manufacturing Indigenization: Leverage "Make in India" to reduce dependence on any single defense supplier to below 40% market share. Current Russian dominance creates vulnerability; Western alternatives create different dependencies. Only indigenous capability provides genuine autonomy.

Rupee Internationalization with Tactical Framing: Pursue bilateral trade settlement arrangements framed as practical trade finance rather than de-dollarization. Start with sympathetic partners (UAE, Russia) before expanding to more sensitive relationships.

Strengthen Regional Integration: Deepen economic ties with Bangladesh, Sri Lanka, Nepal, Maldives, and ASEAN nations to create an India-centric economic sphere that provides market depth independent of great power relationships.

XV.iii. Long-Term (2028-2035)

Technology Sovereignty: Achieve self-sufficiency or secure access through diverse partnerships in critical technology categories: semiconductors (10nm and below), AI computing infrastructure, satellite technology, advanced materials, and biotechnology platforms.

Energy Transition with Strategic Diversification: Reduce overall energy import dependency through renewable development while maintaining diversified fossil fuel suppliers. The goal should be no single supplier exceeding 25% of total energy imports.

Indo-Pacific Maritime Leadership: Build blue-water naval capabilities that enable India to guarantee its own sea lines of communication without depending on US Seventh Fleet protection. This requires sustained defense spending and indigenous shipbuilding capacity.

Educational and Research Excellence: Develop world-class research universities and technical institutes that can compete with MIT, Stanford, Tsinghua, and IIT to ensure long-term human capital advantages in technology competition.

XVI. Conclusion: The Paradox of Strategic Autonomy in an Interdependent World

As of January 16, 2026, India occupies a uniquely complex position in the international system. It possesses insufficient power to dictate terms to any major partner, yet sufficient significance that it cannot be safely ignored by any major power. This intermediate status—too large to be pushed around, too economically interdependent to walk away—defines both the constraints and opportunities India faces.

XVI.i. The Core Strategic Dilemma

India's dependency on the United States remains substantial in technology access and capital markets, but its dependency on the West for energy and defense has meaningfully diminished. This creates asymmetric vulnerabilities: the US can inflict significant short-term economic pain through tariffs and technology restrictions, but lacks the leverage to fundamentally reorient India's strategic orientation.

PM Modi's refusal to make the "closing call" that Commerce Secretary Lutnick claimed would have finalized a trade deal was not diplomatic negligence—it was a calculated assertion that India's foreign policy decisions derive from strategic calculation rather than personal relationships or deference to great power expectations. This signal carries costs, as evidenced by the 50% tariff structure and 8.58% export decline, but it establishes a critical principle: India is a partner, not a client state.

XVI.ii. The Multi-Basket Strategy

The sports metaphor of a referee arbitrarily changing game conditions captures the frustration of dealing with transactional US foreign policy, but it misses India's adaptive response: when the referee moves the basket, India has demonstrated it has the skill to score on different baskets entirely.

The simultaneity of:

• Hosting the BRICS chairmanship
• Finalizing the India-EU FTA
• Joining Pax Silica
• Leading the India AI Impact Summit
• Continuing Quad participation
• Maintaining Russian defense and energy ties

...demonstrates that India is not playing a single game but managing a portfolio of strategic relationships. This approach lacks the elegance of exclusive alignment but reflects the messy reality of a multipolar world where rigid bloc membership creates more vulnerabilities than it resolves.

XVI.iii. The Technology Inflection Point

January 2026 marks a genuine watershed. The commencement of commercial semiconductor production at Micron Gujarat and trial runs at Tata Dholera, combined with the anticipated Pax Silica invitation, position India at the threshold of joining the elite group of nations with comprehensive semiconductor ecosystems.

Success in this domain would fundamentally alter India's strategic position. Semiconductor manufacturing capability translates directly into AI deployment capacity, advanced weapons systems development, telecommunications infrastructure resilience, and leverage in technology negotiations. Failure would consign India to permanent dependency on external suppliers for the hardware foundation of 21st-century power.

The next 18-24 months will determine whether India's semiconductor ambitions translate into genuine capability or remain aspirational. This timeline is unforgiving—global attention and investment flows are finite, and competitors (Vietnam, Indonesia, Malaysia) are actively courting the same semiconductor investments India seeks.

XVI.iv. The BRICS Leadership Test

India's 2026 BRICS chairmanship occurs at a moment when the organization's purpose and effectiveness are under scrutiny. Expanded to include ten full members and numerous partner countries, BRICS risks becoming a talking shop rather than a coordination mechanism.

India's leadership will be judged not by the number of joint declarations issued but by the creation of functioning institutions: operational payment settlement systems, trade finance facilities that actual businesses use, joint research initiatives that produce patents and products, infrastructure investment coordination that delivers completed projects.

If India can demonstrate that BRICS membership delivers tangible benefits—reduced transaction costs in bilateral trade, access to development finance, technology sharing arrangements—it will establish itself as a credible leader of the Global South. If BRICS 2026 produces only symbolic resolutions, India's strategic credibility will suffer, and the organization's relevance will continue to decline.

XVI.v. The AI Governance Opportunity

The India AI Impact Summit scheduled for February 19-20, 2026, represents an opportunity to shape the emerging global AI governance architecture in ways that reflect the priorities and constraints of emerging economies rather than exclusively Western concerns.

The participation of Jensen Huang, Sam Altman, Sundar Pichai, Demis Hassabis, and Bill Gates signals recognition that India's 1.4 billion people, rapidly growing digital infrastructure, and practical experience deploying AI at scale make it essential to any legitimate global AI governance framework.

However, symbolic participation by technology leaders is insufficient. India must translate this moment into concrete outcomes: commitments to compute access, frameworks for AI model sharing, safety standards appropriate for diverse deployment contexts, and development finance for AI infrastructure in emerging economies.

The alternative—a bifurcated AI governance system where Western frameworks apply in advanced economies while the Global South operates in a regulatory vacuum—would entrench technological hierarchies and foreclose India's ambitions to be an AI power rather than merely an AI consumer.

XVI.vi. The Deeper Meaning of Strategic Autonomy

Strategic autonomy, as India practices it in 2026, does not mean isolation or neutrality. It means preserving the freedom to make decisions based on India's assessment of its own interests rather than according to templates provided by Washington, Beijing, Brussels, or Moscow.

This approach frustrates all major powers, each of which would prefer India's reliable alignment with their preferred framework. The US wants India as a full Quad partner firmly positioned against China; China wants India acquiescent to Belt and Road infrastructure and regional dominance; Russia wants India as a guaranteed market and diplomatic supporter; Europe wants India as a reliable manufacturing alternative to China.

India's consistent answer to these demands is: partially, conditionally, and never exclusively. This stance carries costs—foregone benefits of deeper integration with any single framework, persistent diplomatic complexity, occasional isolation when all major powers simultaneously disapprove of Indian positions.

Yet the benefits are substantial: negotiating leverage derived from credible alternatives, flexibility to adapt to changing circumstances without institutional lock-in, leadership credibility among non-aligned nations facing similar pressures, and ultimately the preservation of genuine sovereignty in decision-making.

XVI.vii. Final Assessment

As India hosts the G20 and leads BRICS in 2026 while simultaneously integrating into Pax Silica and finalizing the EU FTA, it demonstrates a sophisticated understanding of power in the contemporary international system. Unipolar hegemony has ended, but the multipolar order that replaces it remains undefined and unstable.

In this fluid environment, India's strategy is to occupy critical positions across multiple emerging frameworks while retaining the flexibility to emphasize different partnerships as circumstances demand. When the referee moves the basket—as the Trump administration has done through arbitrary tariff escalation—India seeks alternative courts where different rules apply.

India's dependency on the United States remains real but bounded. Technology and capital market access create genuine constraints, but energy diversification, defense supplier plurality, and alternative export markets provide options that previous generations of Indian policymakers lacked.

The question for 2026 is not whether India will align with the West or the Sino-Russian axis—that binary framing misunderstands India's strategic culture and current capabilities. The relevant question is whether India can successfully manage the extraordinary complexity of simultaneous partnership and rivalry with all major powers while building the indigenous technological and manufacturing capabilities that would make strategic autonomy sustainable over decades rather than years.

Early indicators—semiconductor production commencing, BRICS chairmanship exercised, Pax Silica invitation extended, India-EU FTA approaching conclusion, AI Summit convened—suggest that India's multi-alignment strategy is producing tangible results despite persistent skepticism from analysts wedded to bipolar analytical frameworks.

The ultimate test will come not in diplomatic forums but in economic metrics: whether semiconductor production scales, whether BRICS payment mechanisms actually settle significant trade volumes, whether AI governance frameworks produce computational resources and not merely principles, whether the India-EU FTA generates export growth sufficient to offset US tariff losses.

India has proven it possesses the diplomatic skill to score on different baskets when one referee moves the posts. The harder question—whether it can build enough baskets of its own that it no longer needs to play on others' courts—remains unanswered. The events of 2026 will provide critical data points for assessing whether India's strategic autonomy evolves from aspirational principle to operational reality.