The US-India romance is over

Abishur Prakash is the founder of The Geopolitical Business, Inc., a Toronto-based strategy advisory firm, and produces the Mr. Geopolitics insights for global leaders.

There was a time when it was easy to characterize relationships. The U.S. and China? Competitors. The EU and Russia? Situationship. Saudi Arabia and Iran? Rivals. The same went for the U.S. and India. A single word defined this relationship for more than three decades since the Cold War ended: potential.

But in the new geopolitical climate, the U.S. and India have entered a fluid moment. The potential is now about how far either side might go to enrage the other — amplified by Washington prodding Europe to introduce 100% tariffs on India (and China), while Indian soldiers attend the 2025 Zapad drills in Belarus, where Moscow and Minsk simulated a nuclear strike on an “adversary.”

The U.S. and India are locked in a strange new dance, where divergence is everywhere, and the glue connecting either side is weakening. The future of U.S.-India ties is marred by uncertainty. Do the world’s two largest democracies still want each other?

A $100,000 fee for H-1B visas, over 70% of which are claimed by Indian nationals, is tearing the U.S. and India apart as both negotiate a trade deal. Now, the U.S. is telling India to curb Russian energy imports to secure the trade agreement and lower tariffs. Three variables — immigration, energy, and trade — are being linked in an unfamiliar way.

Suddenly, India’s relationship with Russia is defining how far it can go with America. Other economies should pay attention. Geopolitical alignment is starting to determine the future of trade and commerce.

Even without Russia, limits on H-1Bs mean a U.S.-India deal could raise economic flows while constricting immigration flows, a new setup.

Another headache is forming around BRICS.

The New Development Bank (NDB), formerly the BRICS Development Bank, is preparing to issue rupee-denominated bonds. This fuses two of President Donald Trump’s biggest hangups: BRICS and de-dollarization. It comes as China reopens its domestic bond market to Russia, further eating into dollar-issued securities.

As India negotiates a deal with the U.S. at the trade table, it is de-dollarizing at the financial table.

The next flashpoint could be India’s involvement in BRICS, like globalizing the rupee, in ways America does not like. Anger at BRICS could derail the Quad (a multilateral coordination group involving Australia, India, Japan, and the U.S), which is already up in the air as Trump debates attending the upcoming summit in India. Unexpectedly, the U.S.-India dance could disrupt rival blocs.

Indian Prime Minister Narendra Modi, center, talks with Russian President Vladimir Putin, left, and Chinese President Xi Jinping ahead of a Shanghai Cooperation Organization (SCO) summit in Tianjin, China, on Sept. 1.   © Reuters

Of course, the big elephant in the room is defense.

While the U.S. and India explore a new 10-year defense framework, the Indian government has paused new purchases of American defense equipment. At the same time, India is exploring a deal for dozens of Su-57s, Russia’s most advanced fighter jets, which could be manufactured in India.

Almost 70% of India’s military equipment is Russian, putting New Delhi in a challenging position. The moment it commits to new Russian defense equipment, America could be livid. But, there may be a silver lining. Could India decouple from Russia in defense to recouple with America in trade?

Unlike with energy, where there is little wiggle room (around 40% of India’s daily oil needs are supplied by Russia), the future of Indian defense procurement may be far more malleable.

On multiple fronts, the U.S. and India are locking horns or on a path toward conflict. There are many calculations to this new dance.

First, the U.S. has to factor in China and Russia. For at least a decade, America has lambasted policies that drove Beijing and Moscow together. Yet, in real time, U.S. positions are pushing India to circle the Sino-Russian alliance. If the U.S. and India lock horns, like additional U.S. tariffs in the coming months, New Delhi may join Beijing and Moscow — a shift that many could view as another U.S. blunder.

Second, the term “neutrality” has so far been applied to the U.S.-China dance. But, it also applies to the U.S.-India dance. The pressure is building on countries like Japan, Saudi Arabia, the United Arab Emirates, Indonesia and others to decide how far they will go with India. In particular, Japan’s strategy to double foreign investment in India could occur against the backdrop of America pulling its allies away from the Indian economy.

Third, without India, the Western business community faces dim growth prospects. The only market that can offset China is India. If both China and India are in Western crosshairs, where do Western firms invest? This will put the spotlight on the Middle East, Southeast Asia and Africa, creating a cascading effect from the new U.S.-India dance.

Fourth, questions of ideology are returning as the world’s two largest democracies face off. If India shifts toward the Sino-Russian alliance, the U.S. will be in a strange position. It can no longer label the counter-world order as authoritarian and communist. The U.S. ability to “flip nations” on the basis of democratic ideas could face limits if India is out of the picture.

The new dance presents U.S. and Indian officials with different questions. In New Delhi, is America worth fighting for? In Washington, is India worth fighting with?

The answers to these questions, if they were ever asked, were once obvious. Today, they require introspection and debate. The new 100% tariffs on imported movies into the U.S. (sidelining Bollywood) or the White House stopping clean energy projects (colliding with India’s solar vision) pull the U.S. and India further apart.

And, the new U.S. tie-ups with Pakistan only make matters worse.

What is beginning is an era where both sides view each other through a more transactional lens — where short-term gains are given more weight than long-term security.

For those who still seek a century-defining partnership, the light is dimming. Even if the U.S. and India patch things up, the old romance is gone — along with trust and dependability. In the new status quo, both sides will cautiously walk together, aware that their paths, once overlapping, have begun to permanently diverge.

It is now a relationship in which the differences between both nations, once manageable (or overlooked), may have passed the point of resolution.

The article appeared in asia.nikkei