How India Is Hedging in a Fragmented Global Order

India’s recent diplomatic choreography has been misread as a geopolitical conversion: first a landmark trade agreement with the European Union, and now a headline-grabbing “deal” with the United States that reportedly includes an end to Russian oil purchases. But this narrative of a decisive turn to the West oversimplifies New Delhi’s strategy.

A New Trade Architecture for a Fragmented World

In the space of weeks, India has concluded trade pacts with both the European Union and the United States, striking at the heart of a fracturing global economy. On January 27, 2026, New Delhi and Brussels signed the India–European Union Free Trade Agreement, nearly two decades in negotiation, designed to liberalize goods and services and deepen investment cooperation. The EU will levy zero tariffs on roughly 99.5% of Indian exports over time, potentially unlocking an export boom and nearly doubling bilateral trade toward an estimated $272 billion by 2032.

India’s trade with the EU already stood at US$136.5 billion in 2024–25. This is comparable to its US trade figure and larger than its trade with China. This FTA isn’t merely economic: it positions India at the nexus of US-EU tensions insofar as the latter now has unrestricted access to one of the largest economies in the world. In the wake of US-EU tensions, an agreement with India gives the EU a very timely leeway. This deal also allowed India to position itself as an alternative to China for Europe. Europe wants supply chain alternatives to China; India wants market access and technology flows. The pact thus serves both interests without subjugating to a geopolitical script.

The reported US–India “deal” similarly reframes trade rather than reshapes alignment. Announced in early February 2026, the agreement cuts US tariffs on Indian exports from 50% to 18% on many goods, and opens American markets for Indian products across defence, petroleum, and other sectors. Reports show that India’s exports to the US alone were around $85.5 billion through 2025, with lower tariffs poised to boost competitiveness.

Yet crucially, this is described as a deal, not a comprehensive, binding trade treaty comparable to, say, the US–Mexico–Canada Agreement. Details on sectoral coverage, non-tariff barriers, and future commitments are still being worked out, suggesting India has deliberately kept the arrangement flexible and contingent, making everything amenable to a post-Trump US administration. Still, the “deal” is going to take a lot of pressure off India in the short term. Therefore, rather than joining a Western economic bloc, New Delhi is building cross-spectrum trade ties that insulate it from the volatility of any single partner.

Russia, Oil, and Strategic Autonomy

The most contentious flashpoint arising from the US-India trade deal is India’s reported commitment to end or scale back Russian oil imports. White House officials have claimed India will cease buying Russian crude, and US media reports frame this as a geopolitical pivot.  But both New Delhi and Moscow have already signalled that nothing so categorical has been agreed. The Kremlin noted it sees “nothing new” in India’s intent to diversify oil supplies. Similarly, Times of India reporting indicates that while a reduction is envisaged, Indian refiners are unlikely to see an immediate drop in Russian oil imports, and new purchases may continue in the near term.

This nuance matters because Russia remains deeply embedded in India’s energy and security architecture. In 2024–25, bilateral trade surged to approximately US$68.7 billion, driven largely by oil and defence ties, with Russia constituting India’s largest single crude supplier. Now that India has agreed with the US to purchase, via the US, Venezuelan oil, it is not a decisive realignment. New Delhi’s energy diversification is as much economic prudence as geopolitical maneuver: India imports nearly 88% of its crude needs, and discounted Russian oil helped stabilize domestic energy costs post-2022. But even as Indian officials signal a shift, market realities and infrastructure constraints mean a rapid unravelling of this relationship is unlikely. Either way, the reported oil element of the US-India deal reflects the instrumental use of trade policy as leverage, not a wholesale abandonment of Russia.

China, Diversification, and the Art of Not Choosing Sides

If India’s trade deals with the West are misunderstood as alignment, its stance toward China is equally misrepresented when read in binary terms. China remains India’s largest trading partner after the EU and the US. In fiscal year 2024–25, India’s trade with China was approximately $128 billion, nearly on par with its US trade. There is no sign that New Delhi seeks to decouple; rather, like its EU and US engagements, India is broadening its economic portfolio so that no partner exerts undue leverage.

The hedging logic towards Beijing is reinforced by India’s supply chain strategies. Facing repeated disruptions in global trade and growing Western concerns about dependence on China, India has positioned itself as a manufacturing alternative—especially in labour-intensive sectors. The US and EU deals both implicitly support this diversification without mandating a geopolitical anti-China stance as part of the deal. In practice, this has meant retaining economic links with China while courting Western capital and markets, a posture often described in Indian policy circles as “multi-alignment.” It is not the absence of choices but the deliberate embrace of many. This is a fundamentally different posture from a binary West-versus-East alignment.

Hedging, Not Abandonment

In the end, India’s recent trade diplomacy should be read as strategic hedging amid a fragmented global order, not as a decisive geopolitical relocation. New Delhi is pursuing deeper ties with the EU and the United States precisely because diversification reduces vulnerability. Its trade architecture resists the lure of bloc politics: the EU FTA is structured to tap into Western market access and technology; the US “deal” is deliberately flexible; and India’s ties with Russia and China remain substantive even as they evolve.

In an era of geopolitical fracture, India’s expanded menu of partners allows it to calibrate interests and recalibrate when the global balance shifts. This is not abandonment or alignment. It is hedging with determination, and in a multipolar world, that posture may be India’s greatest strategic asset.

Salman Rafi Sheikh, research analyst of International Relations and Pakistan’s foreign and domestic affairs

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