Part 8 of 8 -part series exploring India’s unstoppable growth and the challenges it must navigate

How India Weathers Geopolitical Shocks

A Turbulent Global Order

The world faces unprecedented instability. The Russia-Ukraine war, erupting in 2022, disrupted energy and food markets, with oil prices briefly exceeding $120 per barrel and wheat prices surging. U.S.-China rivalry has intensified through trade wars, tech decoupling, and Indo-Pacific tensions. Middle East conflicts, including Israel-Hamas clashes and Houthi attacks on Red Sea shipping, threaten supply chains. For India, a net energy importer with a volatile neighborhood, these shocks pose risks to economic stability and security. Yet, India’s neutral foreign policy and adaptability have enabled it to thrive.

Neutrality: India’s Strategic Anchor

India’s foreign policy, shaped by the Non-Aligned Movement, prioritizes strategic autonomy, avoiding alignment with any power bloc. This neutrality allows India to engage rival powers based on national interest, a strategy that shines in today’s multipolar world.

Case Study 1: Russian Oil and U.S. Weapons

• The Russia-Ukraine conflict highlights India’s balancing act. Western sanctions on Russia created opportunities for India to buy discounted crude oil, making Russia its top supplier by 2023. This kept fuel prices stable, curbing inflation. Simultaneously, India deepened defense ties with the U.S., procuring MQ-9B drones and joining Quad exercises. Despite U.S.-Russia tensions over Ukraine, India faced little backlash, leveraging its role as a counterweight to China while preserving ties with Moscow.

Case Study 2: U.S.-China Rivalry

• India navigates U.S.-China tensions with finesse. As trade wars and tech restrictions reshape supply chains, India’s “Make in India” and PLI schemes attract firms diversifying from China, boosting electronics and pharmaceutical exports. Yet, India avoids antagonizing Beijing, engaging it through BRICS and SCO while managing LAC border tensions. Participation in the Quad signals deterrence, but India’s refusal to join Western sanctions on China preserves economic ties, ensuring access to markets and critical minerals.

Case Study 3: Middle East Balancing Act

• Middle East volatility, driven by Israel-Hamas clashes and Houthi attacks since 2023, threatens energy security. India, reliant on Gulf oil, maintains ties with Israel for defense cooperation while strengthening economic partnerships with Saudi Arabia and the UAE. Its humanitarian aid to Gaza and advocacy for a two-state solution enhance its neutral image, securing energy supplies amid regional strife.

Additional Pillars of Stability

Beyond neutrality, several factors bolster India’s resilience:

1. Economic Diversification: India’s 6.8% GDP growth forecast for 2025 reflects a robust economy. Its IT and digital services sector cushions commodity price shocks, while exports of refined Russian crude to Europe offset trade disruptions.
2. Regional Diplomacy: India’s “Neighborhood First” policy stabilizes its region. Aid to Sri Lanka during its 2022 crisis and infrastructure projects in Maldives counter Chinese influence, fostering regional stability.
3. Defense Modernization: With a $75 billion defense budget in 2025, India enhances deterrence through indigenous systems like the Tejas jet and imports from Russia, the U.S., and France, reducing reliance on single suppliers.
4. Domestic Reforms: GST, digitalization, and UPI streamline subsidies, shielding citizens from global price spikes. Aadhaar-enabled welfare ensures efficient crisis response.

Outcomes and Challenges

India’s approach yields clear benefits:

• Economic Resilience: Discounted Russian oil saved billions, keeping inflation below 6%. Diversified trade mitigated supply chain disruptions.
• Diplomatic Clout: India’s G20 presidency in 2023 and Global South advocacy position it as a bridge between blocs.
• Strategic Flexibility: Engaging rival powers avoids entanglement in conflicts while advancing interests.

However, risks persist. Neutrality may strain Western ties if seen as too accommodating to Russia or China. Border tensions with China and Pakistan’s instability demand vigilance. Energy and mineral import reliance highlights the need for diversification.

Conclusion: A Pragmatic Model

India’s resilience amid geopolitical shocks showcases strategic autonomy. By buying Russian oil, procuring U.S. weapons, engaging China while joining the Quad, and balancing Middle East rivalries, India turns volatility into opportunity. Its playbook offers lessons for nations navigating a multipolar world, proving pragmatism trumps ideology. As global tensions endure, India’s stability underscores its rising influence.