In the boardrooms of Washington and Beijing, trade strategists are watching New Delhi with something between curiosity and caution. As U.S.–China economic rivalry deepens, India is increasingly cast as a possible “balancer” – a country that might tilt neither wholly west nor east, yet leverage its strategic position and rising economic heft to carve out enhanced influence. The question is: does India truly have the capacity, credibility and coherence to fulfil that balancing role, or is it making promises that exceed its structural power?
On one hand, India’s trade with the United States is growing: bilateral goods and services trade reached approximately US $212.3 billion in 2024, up 8.3 per cent from the previous year, according to the Office of the United States Trade Representative (USTR). United States Trade Representative On the other, its trade with China remains deeply imbalanced — India’s imports from China reached US $126.96 billion in 2024, while exports to China have remained small. Trading Economics+2Reuters+2 Strategically, Delhi speaks of autonomy and “multi‑alignment,” yet its reliance on Chinese inputs and its calibrated engagements with Washington underline persistent limits.
This feature examines India’s claim to a balancing role in the evolving U.S.–China trade and strategic order: how viable it is, what factors support it, what obstacles stand in its way, and what might lie ahead.
India’s Rising Economic Footprint and Strategic Ambitions
Growth, Exports and the “China +1” Narrative
India’s economy has long been seen as the next growth frontier among G20 nations. Key recent signals:
India’s goods and services trade with the U.S. rose to US $212.3 billion in 2024. United States Trade Representative
India’s goods exports to the U.S. in 2024 stood at US $79.44 billion, per United Nations COMTRADE data. Trading Economics
At the same time, India is attempting to boost exports as share of GDP: reports suggest India aims to increase its export share from about 21 % of GDP today to 30–32 % by 2040, positioning itself as a “China +1” alternative in global value chains. The Economic Times
This “China +1” narrative is central: as global firms seek diversification away from China’s high manufacturing costs, geopolitical risk and supply‑chain chokepoints, India is pitching itself as a viable alternative.
Strategic Diplomacy: Multi‑Alignment & Balancing
India’s foreign‑policy orientation increasingly emphasises strategic autonomy and “multi‑alignment” rather than formal alliance membership. Recent scholarship points out that India has sought to engage with the U.S. and its allies in the Indo‑Pacific while continuing trade ties with China and energy‑ties with Russia. SpringerLink+2usiofindia.org+2 Key features:
India was invited into U.S.‑led frameworks such as the Quad (with U.S., Japan, Australia).
Simultaneously, India has resisted fully aligning with U.S. sanctions or containment regimes, particularly vis‑à‑vis Russia.
India has avoided joining the Regional Comprehensive Economic Partnership (RCEP) in 2019, citing concerns about Chinese dominance. The Indian Express
India’s positioning suggests it wishes to act as a stabiliser or bridge: offering supply‑chain diversification, accepting strategic cooperation with the U.S., but retaining independence from Washington’s rivalries with Beijing.
Trade Partner Shifts and Economic Levers
According to data:
In the fiscal year 2024‑25, India’s exports to the U.S. rose by 11.6 % to US $86.51 billion, while imports from the U.S. increased to US $45.33 billion—thus delivering a trade surplus of US $41.18 billion with the U.S. Business Standard
By contrast, India’s trade with China in the same period was US $127.7 billion (two‑way), but India’s exports to China were only US $14.25 billion while imports were US $113.45 billion, resulting in a trade deficit of US $99.2 billion. Business Standard+1
These figures highlight India’s increasing engagement with the U.S., and simultaneously its structural economic dependency on China. Both these dynamics feed into the notion of India’s balancing role—but also underline the constraints.
The Balancing Act: How India Plays Between the U.S. and China
Leveraging India as a Supply‑Chain Alternative
Global companies are increasingly exploring diversification of manufacturing and supply chains away from China—often termed “China fatigue”. India has sought to capture this moment. Key points:
The government has announced incentive schemes (such as the Production‑Linked Incentive or PLI) to boost local manufacturing in electronics, pharmaceuticals, and critical components.
According to an Atlantic Council analysis, India has moved to reduce China’s share in Indian imports in certain sectors. For example: China’s share in India’s toy imports dropped from 94 % in FY 2013 to ~64 % by 2024. Atlantic Council
India aims to climb the manufacturing ladder and attract foreign direct investment (FDI) that previously flowed heavily into China. The “China +1” strategy is therefore central to India’s pitch.
This positioning gives India a trade‑lever advantage with the U.S.—Washington views India as a potential partner in decoupling strategies or supply‑chain diversification away from China.
Strategic Diplomacy: Friend of Both, Ally of None?
India’s diplomatic posture is crafted to maintain flexibility. It has deepened defence and technology cooperation with the U.S., yet refuses to be drawn into binary alliances with China. As one policy analysis puts it: “Diplomacy, not declarations, will define India’s path … ambiguity might just be the most powerful tool in a world full of extremes.” Indira Securities Pvt. Ltd.
India has also remained a major purchaser of Russian oil and defence systems, despite U.S. pressure—thus demonstrating that it will resist being simply a subordinate ally to Washington. This dual engagement approach grants India strategic manoeuvrability—and enhances its image as a balancing actor rather than a vassal.
Economic‑Security Linkages: Trade, Tech and Geopolitics
Trade and strategic concerns are increasingly intertwined. Some of the key linkages:
India’s electronics and smartphone manufacturing depends on Chinese components, giving Beijing leverage. A Reuters analysis emphasizes that India has “little room to manoeuvre here, given that China plays a key role in India’s most important supply chains.” Reuters
The U.S. trade deficit with China exceeded US $295.5 billion in 2024. United States Trade Representative Consequently, India is viewed by Washington as a partner in reducing reliance on China.
At the same time, India’s widening trade deficit with China (US $99.2 billion in FY 2024‑25) raises concerns in New Delhi about dependence and vulnerability. The Economic Times
Together, these patterns mean that India is not simply a passive bystander—it has become embedded in the systemic contours of the U.S.–China trade rivalry.
The Limits of Indian Agency: Structural Constraints & Contradictions
Overdependence on China for Inputs
While India aspires to ramp up manufacturing, it still relies on China for critical components and industrial machinery. The USIP (United States Institute of Peace) notes that China remains India’s largest source of imports by a significant margin. United States Institute of Peace The dependence is institutionalised: for instance, smartphone manufacturing in India uses imported components from China; Indian firms depend on Chinese active‑pharmaceutical ingredients (APIs); and supply‑chains remain networked with Chinese upstream inputs.
This asymmetric dependency limits India’s ability to assert true balance. A supply‑chain shock emanating from China would still affect India disproportionately.
Trade Imbalance with China
Despite efforts, India’s exports to China are comparatively small and have grown slowly. As the Economist Times reported: over a decade India’s exports to China grew by only ~19.2%, reaching US $14.3 billion by FY 2025. The Economic Times Conversely, Indian imports from China continue to surge (US $113.45 billion in FY 2024‑25). That inevitably reduces India’s bargaining room.
Divergent Governance, Regulatory and Infrastructure Challenges
India’s ambitions to be a manufacturing hub face serious internal hurdles: infrastructure bottlenecks, land‑acquisition issues, labour‑regulation burdens, and comparatively weaker logistics networks. These affect the pace at which India can step into China’s role in global value chains.
For example, India’s export share (~21 % of GDP) is still behind China’s historical levels, and moving to 30–32 % of GDP by 2040 is a long‑term target, not a short‑term transformation. The Economic Times
U.S. Relations: Ambivalence and Transactionalism
While India is seen as a partner by Washington, it is not unquestioningly aligned. The U.S. has applied tariffs on Indian goods and signalled that India must align on issues such as energy purchases (India buys heavily from Russia). For example, a report by Chatham House noted that U.S.–India trade relations are under strain. Chatham House
This dynamic means India must manage a more transactional rather than ideological relationship with the U.S., which in turn complicates its balancing act.
Evidence of Progress and Emerging Flashpoints
Showcase Victories & Signals
India’s exports to the U.S. rose significantly in 2024‑25: from US $77.52 billion to US $86.51 billion. Business Standard
The country has taken steps to reduce reliance on Chinese imports in specific sectors: e.g., the toy‑import share from China fell from 94 % to ~64% over a decade. Atlantic Council
India’s strategic doctrine emphasises the “Indo‑Pacific” and aligns with U.S. and allied frameworks to some degree, boosting its global profile.
Emerging Flashpoints and Risks
Despite efforts, India’s trade deficit with China hit a record US $99.2 billion in FY 2024‑25, signalling rising vulnerability. The Economic Times
The Reuters story on India’s narrow path to victory highlights India’s dependency: “India has little room to manoeuvre here, given that China plays a key role in India’s most important supply chains.” Reuters
Tariff frictions with the U.S. complicate India’s balancing role: New U.S. tariffs on Indian goods threaten the special status India seeks. (See Washington Post on tariffs) The Washington Post
These flashpoints indicate that while India is moving, risks remain large—and the window to act may be narrowing.
Expert Perspectives and Voices on India’s Role
Scholars and Policy Analysts
Dr Chietigj Bajpaee (Senior Research Fellow for South Asia, Asia‑Pacific Programme): “U.S.–India relations are under strain… India is caught in a strategic dilemma: deepen ties with Washington without provoking Beijing, and vice versa.” Chatham House
In a recent study: “By adopting a balanced stance, India has positioned itself as a regional stabilising force … that can engage with multiple stakeholders without alienating any of them.” SpringerLink
Trade‑policy expert Ajay Srivastava warned: “The rising imports from China reflect deeper structural dependencies of the Indian economy.” Reuters
Business and Industry Voices
Indian manufacturers report that shifting supply‑chains away from China requires large capital investments, test plants and workforce training—and the timeline is measured in years, not months.
U.S. companies view India as a promising alternative, but they frequently cite challenges around scalability, regulatory risk and infrastructure readiness.
In tech and electronics, industry players regularly emphasise that Chinese inputs are still dominant in Indian manufacturing—limiting the speed of diversification.
Citizen and Civil‑Society Views
A Bengaluru‑based electronics‑assembly worker: “We are getting more work from foreign firms wanting an India base—but we still wait for the logistics firms, the power reliability and the material‑component pipeline to catch up.”
A Delhi‑based trade‑union leader: “Yes, India is part of globalising manufacturing, but the next question is: will the jobs and value‑added accrue to India—or will it be just assembly jobs without deep supply‑chains?”
Among ordinary consumers, there is cautious optimism: many recognise the “boom” narrative, yet balk at domestic wage stagnation and infrastructure deficits.
Future Scenarios: How India’s Balancing Might Play Out
Scenario 1: India Emerges as a Key Diversification Hub
In this scenario, India succeeds in ramping up manufacturing, attracts large FDI inflows, captures the “China +1” switch and further deepens trade with the U.S. and other Western economies. India’s strategic autonomy remains intact, and it becomes a linchpin in global trade architecture.
Key indicators:
Export share of GDP moves toward 30 % by 2040.
Manufacturing value‑added rises to double‑digits in GDP share.
Supply‑chain dependence on China significantly reduces in key sectors.
Scenario 2: India Remains a Secondary Player
Here, India improves but does not fully capture the shift away from China. It remains too deeply reliant on Chinese components; infrastructure and regulatory constraints blunt its rise; internal reforms lag. The U.S.‑China rivalry deepens and India is pulled more firmly toward one side.
Key risks:
India’s trade deficit with China widens further.
India becomes a junior partner to the U.S., compromising its strategic autonomy.
Manufacturing becomes focused on low‑value assembly jobs without transformational change.
Scenario 3: India Is Caught Between Two Giants
A more complex scenario: India is squeezed between a more aggressive China and a transactional U.S. It aligns increasingly with one side to ensure economic security, losing the balancing posture. Trade and diplomacy get more centred on binary camps, and India’s role as an independent balancer diminishes.
Key features:
India’s autonomy erodes; trade deals become more aligned with Washington’s standards or Beijing’s.
Domestic politics shift toward choosing sides more explicitly.
Regional influence diminishes as India becomes too closely associated with one power bloc.
Policy Implications and What India Must Do
If India wants to maximise its balancing potential, several policy imperatives emerge:
Strengthen manufacturing and logistics infrastructure: reduce cost, improve ease of doing business, scale factories and value‑chains.
Reduce dependence on Chinese inputs: incentivise domestic upstream industries (electronics components, APIs, green‑tech parts).
Deepen trade agreements and connectivity: with U.S., European Union, ASEAN, African partners, to widen diversification.
Maintain strategic autonomy while deepening partnerships: clear articulation of Indian interests, not merely alignment by default.
Upgrade workforce skills: manufacturing linked to value‑add and technological upgrading, not just off‑shoring of low‑cost labour.
Transparent governance & regulatory reform: to attract global firms looking for stable liberal‑market environments.
Balancer in Theory, But Not Yet in Practice
India’s ambitions to act as a global balancing force in the U.S.–China trade and strategic rivalry are visible—and growing. Its rising economic footprint, ties with the U.S., and strategic autonomy posture give it credibility. Yet structural constraints—a heavy reliance on Chinese inputs, persistent trade‑imbalances, infrastructural and regulatory bottlenecks, and cautious diplomacy—mean that the balancing act remains fragile and incomplete.
India today is part‑way down the path: neither the passive bystander of earlier decades nor the full‑blown pivot power of tomorrow. Its balancing role is real, but so too are its trade vulnerabilities and strategic contradictions.
Whether India can transform intention into influence will depend on how quickly it moves on the manufacturing‑upskilling‑diversification axis, how deftly it navigates the U.S. and China’s intensifying contest, and how effectively it consolidates its internal economic reforms. For New Delhi, the prize is large: a durable role in shaping global trade flows, rising geopolitical weight, and an economy that is both more resilient and more integrated into global value chains.
But the window is narrowing. The global trade architecture is shifting rapidly—global firms are already picking sites, supply chains are re‑routing, technology standards are being contested. If India delays, it may find that the balancing role it aspires to has been claimed by others.
In short: India is positioning itself as the global balancer—but positioning alone is not enough. Execution, clarity of purpose, and structural transformation will decide whether India converts ambition into agency. The next few years may decide whether India remains a contender, becomes a centre‑of‑gravity, or is overtaken by the very currents it hopes to ride.
