Trump's Mistake Is India's Opportunity To Make The Most Of China, Russia Ties
High-level meetings, intense negotiations, a high-stakes chess game of diplomacy and deal-making in full-swing. I am not talking about India's deal with the US. But with Russia and China. That's right. India has an opportunity in Trump's tariff crisis. And it's taking that opportunity with both hands.
PM Modi's high-level engagements with Russian and Chinese Presidents — Putin in New Delhi, Xi in Beijing and possibly a symbolic RIC meet on the sidelines of the SCO summit – make room for an array of opportunities in a moment of crisis. Even as India navigates Trump's tariff war, it has legitimate areas to address with respect to Moscow and Beijing. India has a large trade deficit with Russia, driven by oil sales swelling abruptly over the course of the Ukraine war, which New Delhi wants addressed. Meanwhile, the reset with China has entered fertile ground in the current geopolitical circumstances, which raises the chance of good faith outcomes and mutual understandings.
The United States under President Donald Trump has triggered geopolitical shockwaves far beyond the realm of trade and tariffs. One of the worst hit has surprisingly turned out to be India. While Trump's classic style of deal-making could not breach India's redlines, a number of geopolitical threats emerged on the table, essentially upending India's entire calculus around its relationship with the US and its place in the Indo-Pacific.
Trump made a series of provocative missteps, weaponising Pakistan against India, seeking credit where it was not due on Operation Sindoor and trying to mediate on Kashmir. This couldn't fly with India which made its displeasure known, leading to a conflict of minds right at the very top. The stage was set for a grand fallout. But the trigger came from the trade deal.
Trump had expected big numbers, large unrealistic commitments in terms of investments, defence and energy purchases, credit for the India-Pakistan ceasefire, perhaps a nobel prize nomination, maybe even more. This was when Trump introduced the Russia card seemingly out of nowhere.
Failing to get Russia to agree on a ceasefire in Ukraine for six months, Trump changed tack and decided to go after Russia's oil customers. The American President steered clear of China, the number one buyer of Russian oil and went for the 2nd best thing — India which he may have found easier to bully. He threw Russian oil into the mix of trade negotiations to build the ultimate leverage, dramatically close to his tariff deadline. Now India faces 50% tariffs from the US, the highest for any country, a stark uncertainty about any future trade deal, and a relationship so sour it could make a lemon blush.
Western experts have become increasingly wary of India's deepening alignment with BRICS partners especially with Russia and China as a result of Trump's missteps. India will welcome Putin for an annual bilateral summit later this month, after which PM Modi will head to China for the SCO summit where he will be meeting Xi Jinping. Even the Russia-India-China trilateral may be in season – something both Russia and China crave.
Moreover, China and India have been pursuing a reset, with India showing more hesitation than China on the economic front. But it's time to turn Trump's tariff crisis into an opportunity with Russia and China. Starting with Russia, India has developed a large trade deficit in the last three years of the war in Ukraine. India's purchase of discounted Russian oil drove this deficit. A lot of these payments were done through the rupee-ruble payment system, which means Russia holds billions of rupees right now which India wants it to pump back into the Indian economy as investments and for imports from India.
When External affairs Minister s Jaishankar visited Russia in November in 2024, he raised with Putin this ballooning trade deficit calling for its 'urgent redressal". Bilateral trade has grown one-sidedly. In 2021, India-Russia trade was just about $1 Billion. But it rose sharply after the Ukraine war. Oil prices skyrocketed, and India started buying discounted Russian oil, taking trade to almost $71 billion, with Indian imports at $65.7 billion and exports to Russia at $4.9 billion. In just a few years, trade surged by 6000% taking the trade deficit as high as $61 billion. Resolving this matter is crucial to establishing a long-term and sustainable trading partnership.
India has several asks from Russia to settle this imbalance and they will be at the top of the agenda as the leaders meet later this month: Firstly, Russia must reduce non-tariff barriers and increase imports of pharmaceutical, machinery, chemicals and agricultural products. It can invest in Indian infrastructure, manufacturing and services. There are talks on a bilateral investment treaty to push this. Russia must expedite the Free trade agreement or FTA talks with the Eurasian Economic Union whose members are Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia.
Russia now holds billions of rupees in Indian banks, especially in Special Rupee Vostro Accounts (SRVAs). India pushed for Russia to invest these rupees back into the Indian economy. Several mechanisms have been put in place: RBI has allowed Russian entities to invest rupee balances in sovereign and infra-linked securities. Regulations now permit Russian investment in Indian stocks and bonds. India and Russia are exploring mechanisms akin to the India–UAE model (invoicing and payments in rupee/dirham based on central bank arrangements) and discussions are underway on implementing trilateral settlement mechanisms involving the UAE.
Moreover, Russia's oil discounts have narrowed from their peak of above $12 per barrel to just $2-3/barrel. As demand shrinks from Indian refiners given the narrowing discounts and later the tariff threat from America, Russia has sought to deepen the discounts to $5/barrel.
All in all, India's trade gap with Russia is hitting the roof—fueled by oil and the rupee–ruble tango. Russia's parking its rupees in Indian assets, but closing the gap needs more Indian goods going out and Russian cash coming in. Oil discounts that once gushed have trickled, but to secure its place in the Indian oil import basket, Russia might want to sweeten the deal again.
When it comes to China, another crucial opportunity awaits. Foreign Minister Wang Yi's visit to India on August 18 to meet NSA Ajit Doval set the stage for PM Modi's first trip to China in seven years, aimed at 'instilling positivity in the relationship". While the reset in India-China relations started in 2024, it has gained momentum under current geopolitical conditions, opening the door for constructive outcomes.
India wants Beijing to step up transfers of rare earths, strategic machinery and specialty fertiliser, all of which it has weaponised in trade negotiations. Meanwhile, New Delhi may consider easing restrictions on Chinese investments in select sectors—helping address its nearly $100 billion trade deficit.
Post-Galwan, India had largely shut the door on Chinese investments for national security reasons, allowing approvals only on a case-by-case basis. However, with global investments drying up amid Trump's tariff war, India has pragmatic reasons to cautiously reopen. This is a key ask from the Chinese side as it seeks to be a development partner. Both sides have used their leverage to force favourable outcomes, and now they are close to finding a settlement.
The flurry of movement of late speaks for itself—China resumed the Kailash Mansarovar Yatra, India resumed tourist visas for Chinese nationals after five years and both nations are to restart direct flights. Another major confidence building measure is the resumption of border trade. China has also eased curbs on urea shipments, a massive batch of diesel oil has been shipped to China from India's Nayara refiner which faces EU sanctions, and expectations are high for further relaxation on specialty fertilizer and rare earth exports. This rapprochement could become a win-win if managed strategically, with major announcements possible during a likely Modi-Xi meeting. Such progress may even boost military disengagement in the Himalayas.
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Does that mean China can be trusted? Absolutely not. Beijing remains a military and strategic adversary, with an unresolved boundary dispute and an enduring alliance with Pakistan. Yet, peace thrives on nuance. Just as a bloody border clash once destabilised economic engagement, a deliberate effort to stabilise economic ties could, over time, ease tensions on the strategic and military front. Through more than four years of a military standoff, China has received India's message of resilience in the face of an adversary. China has recently tried to cultivate goodwill with India, recognising that peace serves its interests as much as India's, and has behaved with relative restraint at the border. This dialogue has the potential to lay out a roadmap for peaceful bilateral ties in the years ahead. The key is to preserve the positive while keeping a watchful eye on the negative, and if this reset brings a few years of peace and growth, that would be an optimal outcome.
Simply put, India was already on its way to reset ties with China, and to address the trade imbalance with Russia. With Trump's antics, both these missions become even more urgent. There are no real friends in geopolitics, only interests. Now, as Trump's trade bombs drop and global norms unravel, New Delhi's playbook is simple—adapt, hustle, and never bet on 'forever friends'.
About the Author
Shubhangi Sharma
Shubhangi Sharma is News Editor - Special Projects at News18. She covers foreign affairs and geopolitics, and also keeps a close watch on the national pulse of India.
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donald trump finepoint India-China ties India-Russia ties pm narendra modi
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First Published:
August 19, 2025, 10:35 IST
News opinion Finepoint | Trump's Mistake Is India's Opportunity To Make The Most Of China, Russia Ties
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