The Indian Dilemma: How To Balance A Bipolar World?

Normally, the new US president’s first 100 days are taken to assess the administration’s efficacy. Even after 180 days, the possible resolution of trade disputes and ongoing military operations in Ukraine and Gaza are still unclear. Australian prime minister Anthony Albanese undertook a 6-day China visit in mid-July to balance relations between strategic partner America and vital economic patron China. The Chinese president, Xi Jinping, suggested closer engagement “no matter how the international landscape may evolve”.

A similar dilemma confronts Indian policymakers handling diplomacy and trade. Take Prime Minister Narendra Modi‘s visit to Brazil for the BRICS summit. He was still en route to India when a spat erupted between the Brazilian president, Luiz Inacio Lula da Silva, and US president Donald Trump. The altercation was not over foreign policy differences but President Trump’s blatant interference in Brazil’s internal affairs. He demanded that the trial against former Brazilian president Jair Bolsonaro be dropped. Interestingly, the charges, identical to past allegations against Trump, are of using extra-constitutional methods to retain power. Lula rejected the US intervention and even threatened retaliation if the US imposed punitive tariffs. In May 2025, he also visited Beijing for the China-CELAC Forum, a dialogue between China, Latin America and the Caribbean nations. President Lula maintained that Latin America wanted to be “the axis of a multipolar order where the Global South is duly represented”.

Thus, the world today faces a new bipolarity, somewhat reminiscent of the Cold War. The US, uncertainly supported by its NATO allies, is one pole, while the China-Russia axis is the other. The difference, compared to the Cold War era, is that China and the US may be rivals, but they are also mutually dependent for trade and technology. The Cold War rivals, the Soviet Union and the US, had no such links. This makes balancing between the two poles tougher for the middle and emerging powers, like Brazil and India. For India, it is further complicated by the Sino-Indian border dispute and China perceiving India as a potential rival. Most of the Non- Aligned Movement (NAM) members, during the Cold War, had no such problem engaging the Soviet Union.

India’s immediate problem is the finalisation of a US trade deal to avoid “reciprocal tariffs” after the August 1 deadline. President Trump’s constant flip-flopping over tariffs, announced and then postponed or reduced, increases the uncertainty. This has happened over two dozen times since April 2, declared as the “Liberation Day”. Consequently, Trump was labelled TACO, or Trump Always Chickens Out. That is probably why the global markets have responded calmly to repetitive US threats. President Trump’s promise of ‘90 deals in 90 days’ has fallen flat, as trade deals have emerged only with Vietnam and the UK, besides a partial understanding with China.

The European Union has revealed that their list of retaliatory tariffs is ready if the US implements the threat of 30% tariffs after August 1, in the absence of a trade deal. Amongst the likely targets are Boeing and Kentucky bourbon. Like Australian Prime Minister Anthony Albanese, India, too, used External Affairs Minister S. Jaishankar’s visit to Beijing for the Shanghai Cooperation Organisation meeting to try normalising India-China relations. The de-escalation at the Line of Actual Control (LAC) is still incomplete, and speculation of an active Chinese role in assisting Pakistan during Operation Sindoor is proving unhelpful. In addition, the Dalai Lama’s 90th birthday fell during this period. His announcement that the Gaden Phodreng Trust, and not China, would decide his successor was a tangible snub. China sees India as complicit in undermining their control over Tibet through active support of the Dalai Lama. However, China also realises the importance of the Indian market, especially in the Trump-disrupted world.

India is making a last-ditch attempt to finalise an interim trade deal with the US. From the Indian perspective, protecting its agricultural and dairy markets are red lines. Elon Musk’s Tesla opening its first showroom in Mumbai would normally be a positive sign. However, his ongoing verbal clashes with President Donald Trump reflect his likely inability to help resolve the Indo-US trade dispute.

Thus, Indian diplomacy has a challenging task, as the Indian investment in close relations with the US is now yielding uncertain dividends. One demonstration of that has been the American outreach to Pakistan. There are also reports of the US government pushing the Pakistani military to make peace with the imprisoned leader of the PTI, Imran Khan. Also hovering over India is the threat of the US targeting all countries buying Russian oil, unless Russia quickly achieves a ceasefire in Ukraine in the prescribed 50-day period. Once again, analysts feel that this threat, like many before, is more for strengthening America’s negotiating position than creating a new confrontation.

Seeing the Australian prime minister’s outreach to China, the US has hinted at a review of the trilateral US-UK-Australia strategic tie-up to provide Australia nuclear submarines. The Pentagon is also reportedly seeking from Japan, South Korea and Australia assurances about their role in case of any Sino-US military confrontation over Taiwan. The US is ignoring that it can hardly expect active military support from strategic allies during any conflict with China when it arbitrarily targets them with tariffs. For instance, with Australia the US actually has a trade surplus but still imposed tariffs.

It is possible that President Trump’s distraction due to his MAGA base splitting over the Justice Department shelving the Epstein papers may compel him to quickly resolve his self-initiated trade war. India is already ratcheting up oil purchases from the US. Enhancing India’s defence equipment purchases from the US is another issue. But generating excessive military dependence on the US would be a strategic blunder. However, the current global politico-economic scenario, as The Economist magazine puts it, “leaves everyone guessing”.

KC Singh is a former secretary of, Ministry of External Affairs.

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