India Precarious Balance: The Hidden Costs of Russian Oil and Chinese Dependencies in Foreign Policy

India's strategic pivot toward consolidating a Russia-India-China (RIC) axis presents a tactical allure but potentially undermines its position as a democratic leader within the Global South. At the Shanghai Cooperation Organisation (SCO) summit in Tianjin, Prime Minister Narendra Modi's symbolic camaraderie with Xi Jinping and Vladimir Putin marked a significant shift in India's geopolitical positioning, occurring precisely when economic interdependence with China and Russia has reached unprecedented levels despite existing tensions.

For Beijing and Moscow, the SCO summit provided invaluable symbolic currency: Xi emphasized the metaphor of "dragon and elephant dancing together," while Putin and Modi announced expanded cooperation in energy and agricultural trade. However, Washington interpreted this trilateral engagement as strategic defection, with President Donald Trump bluntly declaring on social media that the United States had "lost India and Russia to deepest, darkest China." American frustrations intensified due to India's continued imports of discounted Russian oil and the profitable resale of refined products into European markets, prompting Washington to impose punitive secondary tariffs of 50% specifically targeting Indian exports.

Superficially, India's alignment with the RIC bloc offers tangible benefits. Russian hydrocarbons at discounted rates sustain India's refining sector and provide immediate fiscal advantages; essential Chinese upstream inputs from lithium-ion cells to Active Pharmaceutical Ingredients remain indispensable for manufacturing and green transition initiatives; and the trilateral framework elevates New Delhi's status within a powerful multipolar coalition. For an economy constrained by American tariffs, Western protectionism, and secondary sanctions, the immediate incentive to hedge through the RIC axis appears compelling.

India's strategic pivot toward Russian energy resources has been remarkable in both magnitude and rapidity. Bilateral trade reached a record $68.7 billion in fiscal year 2024-25, dominated overwhelmingly by Indian imports, with $63.84 billion attributed to mineral fuels and crude oil. Indian refiners, both state-owned and private, capitalized on arbitrage opportunities created by discounted Urals crude.

By maximizing operational capacity and exporting refined petroleum products like diesel and gasoline, these refiners secured significant profit margins while reducing domestic energy costs. Tanker-tracking intelligence confirmed that by mid-2025, India was importing approximately 1.6 million barrels of Russian crude daily, with major facilities such as Jamnagar institutionalizing this energy partnership. Conservative estimates suggest cumulative fiscal savings have reached billions since early 2022.

However, these gains remain precarious and conflict with American trade policy instruments. Recent tariff announcements from Washington directly threaten approximately 55% of India's merchandise exports to the United States, a market valued at over $87 billion annually. The potential for order cancellations, reduced investment flows, and reputational damage could rapidly outweigh the fiscal benefits derived from Russian oil imports. In pure economic terms, the equation is stark: marginal billions saved on crude are overshadowed by tens of billions at risk through diminished access to the world's largest consumer market.

What appears as short-term fiscal relief actually conceals a long-term strategic vulnerability. The fungibility of global crude oil markets contrasts sharply with the durability of export relationships that sustain entire industries in textiles, pharmaceuticals, and engineering goods. The inescapable conclusion is clear: energy security achieved through Russian imports provides immediate fiscal breathing room and limited policy autonomy. However, by becoming too deeply embedded in sanctioned energy flows, India exposes its economy to great-power volatility and risks exchanging stable, rules-based trade with advanced economies for fragile tactical arrangements.

While Russian oil presents an acute challenge, India's trade relationship with China represents a chronic, slowly intensifying structural vulnerability. In 2024-25, India imported $113.5 billion in Chinese goods while exporting only $14.3 billion, creating a trade deficit approaching $99.2 billion. This imbalance transcends mere statistics; it reflects fundamental asymmetries in leverage.

Chinese imports predominantly consist of inelastic, upstream inputs essential for India's industrial production base and environmental transition. Over half of India's requirements for solar cells, lithium-ion batteries, Active Pharmaceutical Ingredients, and Key Starting Materials originate from Chinese suppliers. These components cannot be readily substituted in the near term. Any disruption—whether geopolitical, tariff-related, or deliberate—would reverberate throughout the Indian economy, increasing costs, halting production, and endangering national priorities from energy transition to domestic manufacturing initiatives.

Meanwhile, India's exports to China remain concentrated in price-elastic raw materials and low-value-added products, such as iron ore and basic chemicals. This asymmetry grants Beijing significant coercive leverage while leaving India with minimal retaliatory capacity. The imbalance is further highlighted by India's growing semiconductor import expenditure—₹1.71 lakh crore in FY 2023-24—reflecting dependence on Chinese wafers and integrated circuits despite advances in domestic assembly. Effectively, India's manufacturing and environmental ambitions remain constrained at the upstream level by dependencies that China could weaponize with minimal self-impact.

This represents not interdependence but strategic vulnerability. Deeper integration with China's industrial ecosystem increases India's exposure to fundamental structural asymmetries. Unlike Russian oil, which could be diversified with some difficulty, Chinese inputs constitute critical chokepoints affecting the foundations of India's future economic development.

Given India's specific economic and structural vulnerabilities, deepening integration within the Russia-India-China framework offers minimal strategic mitigation. Empirical evidence suggests such an approach contains inherent flaws. Russia's economy, smaller than Italy's, lacks the scale and domestic demand necessary to absorb Indian exports at levels sufficient to offset potential Western market losses. China, despite its economic size, already maintains a substantial trade surplus with India and pursues technological self-sufficiency rather than importing low-value Indian products. Its control over critical upstream supply chains means deeper economic integration would likely reinforce rather than reduce existing asymmetries.

Political costs further compound these economic risks. Expanding relationships with sanctioned Russia invites retaliatory measures, including coordinated tariff responses from Western nations, while increased dependence on China—a country with which India shares a contested and militarized border—heightens vulnerability to upstream supply disruptions affecting semiconductors, chemical intermediates, and other critical components.

The RIC framework therefore fails to create a resilient or integrated economic space. Instead, it magnifies systemic risks while offering only narrow, specific benefits such as discounted energy and legacy defense equipment. It exemplifies the dangers of replacing diversified, rules-based market access with concentrated, politically volatile dependencies, mistaking tactical short-term advantages for sustainable strategic resilience.

The statistics are compelling. Annual energy savings in the low single-digit billions are substantially outweighed by tens of billions potentially lost in export revenue. Structural reliance on Chinese inputs leaves India with minimal leverage in sectors vital for industrial modernization and technological advancement. What might appear as prudent hedging risks becoming an economic dead-end, exposing India to the unintended consequences of concentrated dependencies within an unstable geoeconomic landscape.

India's reliance on Russia and China has yielded short-term benefits through cheap Russian oil, legacy defense equipment, and essential Chinese inputs. Yet these advantages mask growing vulnerabilities: inelastic dependence on Chinese intermediates, increasing exposure to punitive American tariffs, and widening asymmetries in negotiating power.

Addressing these structural risks requires a diversified approach spanning markets, suppliers, and strategic alignments. India's sustainable competitive advantages lie not in low-value supply chains but in advanced services, sophisticated engineering products, pharmaceuticals, vaccines, and increasingly, assembly-intensive electronics. Services exports alone reached $387.5 billion in FY 2024-25, dominated by IT and software—a geoeconomic strength unmatched by most comparable nations.

The strategic imperative is clear: India cannot rely exclusively on tactical arbitrage through the RIC axis. Polycentric engagement represents the optimal path forward.

A comprehensive strategy can develop along three dimensions. Domestically, expanding Production-Linked Incentive schemes, strategic resource stockpiling, and targeted research investment can reduce upstream dependencies and enable self-reliant production of critical inputs. Internationally, pursuing Comprehensive Partnership agreements with the EU and UK while selectively engaging with regional frameworks can diversify market access while reducing concentrated dependencies. Finally, multilateral initiatives like the Indo-Pacific Economic Framework and the Quad offer mechanisms for coordinated supply-chain resilience, technology standardization, and trusted investment corridors.

Looking ahead, India's strategic trajectory should evolve from reactive hedging toward proactive structural autonomy. By combining market diversification, supplier plurality, and technological sovereignty, India can transform short-term gains from RIC engagement into lasting economic and geostrategic resilience. Failure to do so risks cementing dependencies that could compromise the country's broader geopolitical leverage.

(Ankur Singh and Aditi Lazarus are Research Analysts with Centre for New Economics Studies, O.P. Jindal Global University)

Disclaimer: These are the personal opinions of the author