By Robbin Laird
In 2026 India concluded a free trade agreement with the European Union, struck an interim tariff deal with the United States, absorbed a Gulf war that upended its oil supply, sent its air force to train with Japanese fighters, and hosted both Vladimir Putin and Xi Jinping at a BRICS summit in New Delhi. Eleven days before welcoming Putin, Narendra Modi had told him in Bishkek that the world must move from endless war to an end to the war.
Taken one at a time these are episodes. Taken together they describe a state working every relationship at once. My two recent articles argued that this is hedging rather than realignment. India is thinning its dependence on Russia at the margin while keeping the installed Russian base, buying Russian oil when supply and price justify it, and building partners elsewhere.
This article asks what that pattern means for India as a middle power. It uses the framework Kenneth Maxwell and I developed in The Australian, Brazilian and Chinese Dynamic. My argument is that the Russia hedge is a subordinate move in a larger game. The principal problem is China. Russia matters to India less as a partner than as a counterweight, and as a warning about what China’s informal empire does to a partner it has weakened.
What the two earlier articles found
Three findings carry over. First, India’s Russia relationship must be read as stock and flow. The share of new arms deliveries from Russia has fallen from 70 to 40 per cent over a decade, while the installed base remains overwhelmingly Russian in origin. Second, India layers rather than exits. It refused the Su-57 and is upgrading the Su-30MKI with Indian sensors and weapons, but it also ordered more S-400s. Third, Russian oil is a portfolio position, driven by Gulf disruption, Russian supply and American pressure rather than by sentiment about Ukraine.
The Ukraine book supplies the frame around these findings. Putin’s war has shrunk Russia’s reach and made it a junior partner of China. India is the largest Global South customer whose choices decide how far that subordination goes. Its interest is not simply to reduce Russian exposure but to keep Russia from becoming wholly dependent on Beijing while it reduces its own.
What the Australia and Brazil book adds
Our book offers four ideas that matter here.
Informal empire. Following Gallagher and Robinson’s 1953 concept, we argued that China builds influence through trade, investment, ports, finance and a Global South narrative rather than formal control. Latin America was our main case, but the method is general. It creates dependence through commerce and then converts dependence into political leverage.
Two models. Australia leans toward security when forced to choose. It accepts economic costs, banned Huawei from its 5G network, and built a deterrence-focused defense posture around the alliance with the United States. Brazil practices strategic pragmatism. It embraces Chinese trade, uses BRICS to expand its autonomy, and signed a cooperation plan linking its programs to the Belt and Road rather than joining the initiative formally. We explained the divergence through geography, alliance commitments, history and economic structure.
Hedging as the norm. Both countries hedge, in different versions, and we argued this is becoming normal for middle powers rather than exceptional. We also noted that Beijing courts middle powers with a multi-alignment strategy of its own, encouraging cooperative relations with several powers rather than exclusive alignment. Hedging does not threaten China’s informal empire unless it is backed by capability.
Capability, resolve and signalling. Air Marshal Chipman’s framing of deterrence as capability multiplied by resolve multiplied by signalling, where a zero in any term makes the product zero, applies to any middle power facing a larger neighbor. Resolve, he argued, is a whole-of-society problem that includes economic relationships with the adversary.
Is India a middle power?
By the book’s material definition, India does not qualify. It describes middle powers as economies ranking roughly twentieth to thirtieth, while India’s economy is far larger, and India is nuclear-armed with 1.4 billion people. Yet the book’s concluding chapter lists “the Indians” among the significant middle powers, and the functional definition makes sense. A middle power is a state that cannot decide the order alone and must shape it through partnerships, institutions and selective capabilities. India fits that description relative to the United States and China.
India is a third case that combines features of both of our models. Like Australia, it faces a direct security problem with China. It has a contested land border, the 2020 Galwan clash, and a Chinese military build-up on the Line of Actual Control. Like Brazil, it insists on strategic autonomy, chairs BRICS, and refuses to become a treaty ally. Unlike both, it has neither an alliance guarantee nor Brazil’s geographic distance. Its Russian ties give it a hedge that neither Australia nor Brazil possesses.
The informal empire reaches India
The clearest sign is trade. The latest reporting puts India’s trade deficit with China above $112 billion, the widest on record, with imports over $130 billion against exports under $20 billion. Another account says India buys about seven dollars of Chinese goods for every dollar it sells, in a relationship where trade has nearly doubled in five years. Much of this is organic, driven by Chinese price and technology competitiveness, which is exactly how informal empire works. Dependence grows through commerce that appears voluntary.
Leverage follows dependence. Over 90 per cent of India’s rare earth magnets and metals came from China, and Chinese rare earth magnet exports to India fell 58 per cent after January 2025. Earlier this year China also restricted imports of Indian rice and chilli. India’s response includes a Rs 7,280 crore magnet manufacturing scheme approved in November 2025 and rare earth corridors announced in the 2026-27 Budget. These are the right measures, but their effects will take years.
Australia’s experience is instructive. Babbage’s argument in our book is that Chinese coercion of Australia was a “sovereignty war” rather than a trade dispute, and that resilience means diversifying markets and supply chains. A study by Laurenceson that we quote finds that Australia’s interests were protected not by geopolitical friends but by interdependence that constrained Beijing and by access to a rules-based trading system. Diversification worked because alternatives existed.
Russia is the negative example. As the Ukraine book shows, China has made Russia a price-taker, moved it into the yuan, and captured its Far East and Central Asian markets. India has a direct interest in avoiding a similar path.
The diversification ledger
India has spent 2026 building alternatives, and the record shows a familiar hedging style.
On February 2 President Trump announced a deal cutting US tariffs on Indian goods to 18 per cent and said Modi had agreed to stop buying Russian oil. The joint statement did not mention Russian oil, and the Indian government has neither confirmed nor denied the pledge, saying its purchases are guided by national interest. An executive order provides that a 25 per cent tariff would return if India resumes such purchases. Indian refiners meanwhile avoided Russian cargoes for March and April, and Russian crude’s share of Indian imports had already fallen from a 40 per cent peak to under 25 per cent by December.
Then the Iran war began on February 28. India’s Russian oil share went from 18.7 per cent in February to nearly 50 per cent in July, as its Middle East imports fell by 63 per cent. I have not found reporting that the US has reimposed the tariff, although Senate pressure for tariffs on buyers of Russian energy is growing. The sequence looks like textbook hedging: a promise the buyer never had to sign, followed by a supply shock that made the promise moot.
The European track is cleaner. The India-EU free trade agreement, concluded in January, removes or reduces tariffs on more than 90 per cent of goods traded. Implementation is expected in 2027. It was fast-tracked by Trump’s trade war, but it fits the Australian lesson that diversification protects against coercion.
The Chinese track is the most delicate. Modi and Xi were expected to hold talks at BRICS, in a meeting that could consolidate a thaw after 2020. India is also welcoming Chinese investment and supplies while restricting where it can. That is Brazil’s pragmatism combined with Australia’s security caution, in a country that has the border problem of the second and the autonomy instinct of the first.
Defense industry as statecraft
Our book describes three ways middle powers use defense industry. South Korea uses exports as economic statecraft, with a cheaper, better, faster proposition that has reached customers in Europe, Southeast Asia and the Middle East. Australia builds sovereign capability inside alliance frameworks, prioritizing security of supply over export revenue. Brazil pursues niches such as Embraer aircraft and satellites, uses partnerships to reduce costs and risks, and works with France on a patient technology-transfer program for submarines.
India’s approach combines all three. The Super Sukhoi upgrade is Australian in logic, building sovereign capability on an inherited platform. The plan to build 94 of 114 Rafales in India follows Brazil’s French model, in which technology transfer is the aim and the purchase is the vehicle. Record defense exports of Rs 38,424 crore in the year to March 2026 reflect a Korean-style commercial ambition.
What differs is the partner. In Brazil and Australia the industrial partner was France, the United Kingdom or the United States. In India it is also Russia, which has become an embedded partner in production, spares and co-development, as the December 2025 summit made clear. That gives India something neither Australia nor Brazil has, a large installed base of Russian designs it can localize. It is also a liability, because the supplier is weakened and dependent on China. The lesson from our book is that partnerships should build sovereign capability, and India appears to treat Russian co-production in that way, as scaffolding.
Deterrence and resolve
Chipman’s formula applied to India yields an uneven result. Capability is improving, through Indian sensors and weapons, more Rafales and a growing defense industry. Signalling has expanded, with the first Japanese fighter deployment to India in Veer Guardian 26, a maritime security arrangement with Tokyo, and hosting Xi and Putin together. The third term is the hardest. Resolve, in Chipman’s sense, requires the economy to be able to sustain a confrontation. India cannot yet do that. A $112 billion deficit, over 90 per cent dependence on Chinese rare earth magnets and reliance on Chinese inputs for electronics and pharmaceuticals mean that Beijing can impose costs without firing a shot.
This is why the Russia hedge matters for deterrence. India’s stock of Russian equipment faces the Chinese army on the border, and abandoning it abruptly would weaken capability in the short term. But the whole-of-society problem lies in the economy, and Russia offers little help there. Russia buys oil and sells arms, but the industrial and technological dependence is on China.
Coalitions and norms
Two ideas from our book apply to how India might turn hedging into leverage.
The first is Babbage’s call for a “New Security Partnership” among Australia, Japan, India and others, with flexible, purpose-built partnerships rather than formal alliances. Veer Guardian, the maritime arrangement and the EU trade deal are early elements. Japan’s presence is telling. It supports Ukraine, shares satellite imagery with Kyiv, and has sanctioned Indian entities over Russia, yet India deepens military ties with it anyway. That is compartmentalization, and it works as long as India keeps the relationships separate.
The second is Macron’s proposal for an independent coalition of European and Asian middle powers so that no one becomes a collateral victim of superpower choices. The India-EU agreement and the French connection in defense make India a natural candidate. The obstacle we identified in the book applies: middle powers have competing interests and deep economic ties to China that complicate a united front.
The Ukraine book adds a critique. India resists both a Western-dominated and a China-dominated order but has been slow to define the rules it wants, on territorial revisionism, economic coercion, debt and digital governance. Without them, strategic autonomy reads as hedging rather than as a design for the order. Modi’s remark at Bishkek about respecting sovereignty and territorial integrity is the beginning of such a position, but it needs to be built into institutions.
What would show whether the strategy is working
- China’s share of critical inputs. If the rare earth magnet and pharmaceutical dependence falls, resilience is real. If the deficit keeps widening, hedging elsewhere has not solved the core problem.
- Rafale and Super Sukhoi execution. Delivery on time and on Indian content would show that sovereign capability is being built rather than promised.
- Russian oil after the Gulf normalizes. A share that falls well below July would show a strategic decision. A rebound would confirm that supply and price drive the portfolio.
- The US and EU tracks. Implementation of the EU agreement and resolution of the Russian oil ambiguity with Washington will show how far diversification protects India from pressure.
- Rules and coalitions. A defined Indian position on coercion, sovereignty and supply-chain security, and a coalition able to act on it, would mark the shift from hedging to shaping.
Conclusion
The book I wrote with Kenneth Maxwell argued that middle powers are becoming the swing factor in a world where the American-led order is weakening and China’s informal empire is expanding. Australia chose security over economics when forced to choose. Brazil chose autonomy and opportunity. India cannot make either choice cleanly, because it has Australia’s security problem and Brazil’s autonomy instinct.
That explains its hedging with Russia. Moscow is a supplier of legacy systems, a source of discounted oil, and a diplomatic counterweight in forums where China dominates. It is also a lesson in what happens to a partner that China weakens and then absorbs. India’s task is to use these hedges to buy time for building sovereign capability, diversified supply chains and coalitions that reduce China’s leverage.
If it succeeds, India will be the middle power that shows the hedge can be turned into strategy. If it fails, it will have kept its options open while the options narrowed.
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Source: sldinfo.com
