A complex web of global trade dynamics and geopolitical realignments is increasingly shaping India’s foreign economic policy, placing it in a delicate position between seeking internal solidarity within the BRICS bloc and navigating significant bilateral frictions, particularly with the United States. New Delhi is actively advocating for recalibrations in trade relationships, aiming to mitigate substantial deficits with key partners while simultaneously facing steep tariffs and diplomatic pressures from Western economies. This strategic balancing act underscores India’s pragmatic approach to international relations, prioritizing economic stability and growth amid evolving power structures.
India’s External Affairs Minister, S. Jaishankar, recently underscored the nation’s pressing concern over trade imbalances within the BRICS grouping—comprising Brazil, Russia, India, China, and South Africa. Speaking at a virtual summit, Jaishankar highlighted that India’s “biggest trade deficits are with BRICS partners,” a point he pressed for “expeditious solutions.” The most acute of these imbalances is with China, where India’s trade deficit reached an unprecedented $99.21 billion. Chinese customs data further revealed a 16% increase in China’s surplus with India, hitting $77.7 billion by August alone, largely driven by escalating imports into India. A similar pattern is observed with Russia, where India’s trade, primarily fueled by oil imports, reached $68.7 billion this fiscal year, yet yielded a substantial $59 billion deficit for India. These figures compel India to view BRICS primarily as an economic forum focused on tangible business solutions, distinct from the geopolitical challenge to the West that some other members, like China and Russia, envision.
This internal BRICS focus on trade imbalances unfolds amidst broader global trade tensions. President Donald Trump’s administration has levied significant tariffs, with Indian goods facing duties as high as 50%. This rate far exceeds the 30% tariffs imposed on Chinese products, exacerbating tensions between Washington and New Delhi. Bilateral trade talks between the U.S. and India have consequently stalled. Points of contention include U.S. demands for India to curtail oil imports from Russia and open sensitive sectors like agriculture and dairy to American products, demands India deems inequitable. Despite claims from President Trump regarding belated offers from India to reduce tariffs, New Delhi has consistently expressed its willingness to continue negotiations.
The diplomatic rhetoric, however, often presents a more conciliatory tone. President Trump has publicly referred to a “special relationship” between the U.S. and India, praising Prime Minister Modi. In response, Prime Minister Modi reciprocated these sentiments on X (formerly Twitter), affirming the positive assessment of their ties. While such exchanges suggest underlying strength, analysts like Chietigj Bajpaee of Chatham House note that these gestures do not resolve the fundamental trade and policy disagreements. The United States continues to perceive India as a crucial strategic counterweight to China’s growing influence, while India values the U.S. for its technological, defense, and strategic partnerships. This strategic alignment ensures the resilience of the relationship, even as both nations navigate immediate economic frictions and divergent trade policies.
Michael Zhang is a seasoned finance journalist with a background in macroeconomic analysis and stock market reporting. He breaks down economic data into easy-to-understand insights that help you navigate today’s financial landscape.