India balances Russia ties and US pressure with caution

Source: The post India balances Russia ties and US pressure with caution has been created, based on the article “How to duck the US-Russia crossfire” published in “Businessline ” on 1st August 2025. India balances Russia ties and US pressure with caution.

UPSC Syllabus Topic: GS Paper 2- Effect of policies and politics of developed and developing countries on India’s interests.

Context: The U.S. has imposed a 25% base tariff on Indian goods, with threats of higher penalties over India’s ties with Russia and BRICS. With bipartisan support for a tough Russia Sanctions Bill, pressure is building on countries like India to rethink their strategic and energy ties with Moscow.

Rising U.S. Pressure and Legislative Tools

1. Tariff Threats and Sanctions Bill: President Trump has imposed a 25% base tariff on Indian goods. He also warned of additional tariffs due to India’s energy deals with Russia and involvement in BRICS. The proposed Russia Sanctions Bill plans to penalise countries with strong ties to Moscow through 100–500% tariffs and specific restrictions.
2. Use of U.S. Sanctions Laws: The U.S. uses several laws to implement economic pressure globally. These include CAATSA (Countering America’s Adversaries Through Sanctions Act), IEEPA, the Global Magnitsky Act, the Iran Sanctions Act, and others. These laws are enforced by government departments like the Treasury (OFAC), Commerce (BIS), State, FinCEN, and Justice.
3. Indian Energy Trade Under Scrutiny: India’s imports of Russian oil rose from 2% to over 40% between FY22 and FY24, saving ₹35,000 crore. India settled many payments in rupees and dirhams, avoiding the U.S. dollar and SWIFT system. This move, while economically beneficial, has made Washington uncomfortable.
4. Quiet Financial Alternatives: India is exploring alternatives to the dollar such as rupee-ruble trade, BRICS Pay, and the RuPay-MIR card interface. These aim to bypass the dominance of the U.S. financial system and allow smoother transactions with Russia and BRICS partners.

India’s Strategic Autonomy and Balanced Diplomacy

1. Pragmatic Foreign Policy Approach: India avoids binary choices. While deepening ties with the U.S. through QUAD and I2U2, it retains strong engagements with Russia in energy, defence, and space. Simultaneously, it builds relations with Europe, East Asia, ASEAN, and the Global South.
2. Navigating U.S.-Russia Rivalry: India emphasizes development-linked exemptions, energy security, and global governance participation. It neither capitulates to Western pressure nor displays open defiance.
3. Multi-Aligned Engagements: India balances diverse partnerships—signing tech and defence pacts with the U.S. while maintaining legacy defence deals with Russia. This strategy upholds autonomy and avoids bloc-driven politics.
4. Resilience Through Industrial Diplomacy: Efforts like Make in India, PLI schemes, and indigenisation in defence highlight India’s goal to strengthen industrial and economic sovereignty amid global shifts.

Policy Responses to U.S. Sanctions Threat

1. Strengthening Financial Independence: India must accelerate rupee-based international trade with Russia, UAE, and Sri Lanka. Fast-tracking a dollar-neutral reference rate mechanism will enhance trade resilience.
2. Diversifying Energy and Trade Partners: To limit over dependence, India should build strategic ties with West Asia, Africa, Latin America, and BRICS nations, securing and diversifying its supply chains.
3. Defending Sovereign Economic Rights: India must challenge unilateral sanctions using international legal platforms, stressing the illegality of extraterritorial penalties not backed by global consensus.
4. Building Mutual Economic Stakes: Joint ventures in defence manufacturing and semiconductor partnerships with countries like the U.S., Japan, and Taiwan can serve as deterrents against coercive policies.
5. Maintaining Narrative Neutrality: India should continue interest-based, issue-specific diplomacy while remaining neutral in polarised geopolitical narratives.

Upholding India’s Global Role and Norms

1. Realism Anchored in International Law: India’s foreign policy should blend realist strategy with commitment to international rules. This approach legitimises its multi-alignment while resisting unilateral dictates.
2. Projecting Developmental Sovereignty: India must continue positioning itself as a sovereign actor with a responsible voice, pursuing balanced ties to protect its strategic and developmental interests.

Question for practice:

Examine how India is balancing its strategic autonomy amidst rising U.S. sanctions pressure over its ties with Russia.