Opinion For India, the Russia-China framework does not create a resilient economic space

It promises immediate, quantifiable benefits, from discounted Russian crude oil that bolsters energy security and provides fiscal relief, to continued defence cooperation and privileged access to the vast and critical ecosystem of Chinese industrial inputs. Yet, a more rigorous, data-driven examination of this alignment reveals a series of stark economic vulnerabilities and structural fragilities.

The strategic gains accrued in the short term risk being systematically dwarfed by a long-term exposure to highly concentrated market dependencies and precarious supply-chain chokepoints.

The allure of the Russia-India-China (RIC) framework is, from a purely realpolitik perspective, undeniable. But the tactical wins of today could transform into the systemic risks of tomorrow, creating structural vulnerabilities that threaten the foundations of India’s export-led growth model and its aspirations to become a leading power.

In the fiscal year 2024-25, India’s bilateral trade with Russia surged to a record-breaking $68.7 billion, a figure overwhelmingly dominated by India’s imports, which accounted for $63.84 billion. The vast majority of this import bill consisted of mineral fuels and crude oil.

The underlying microeconomic logic is compellingly straightforward: Indian refiners, both state-owned and private, can procure discounted Urals crude, optimise plant throughput to near full capacity, and then export refined petroleum products like diesel and gasoline into global markets. Shipping data and tanker tracking intelligence confirm that during the first half of 2025, India was importing an average of 1.6 million barrels of Russian crude per day.

On the other hand, recent tariff pronouncements from Washington directly threaten approximately 55 per cent of India’s merchandise exports to the United States, a critical market valued at over $87 billion annually.

The potential for order cancellations and the chilling effect on future investment could easily eclipse the gains from the energy arbitrage, with potential losses running into the tens of billions of dollars. Energy security procured through Russian imports buys immediate fiscal breathing room and a degree of policy autonomy but at the cost of long-term export stability.

If the Russian relationship presents an acute and immediate dilemma, India’s economic dependence on China constitutes a chronic and arguably more insidious vulnerability. This is not a relationship of equals, but one of profound structural asymmetry. In the fiscal year 2024-25, India’s imports from China totalled an astonishing $113.5 billion, while its exports languished at a mere $14.3 billion.

This has produced a cavernous trade deficit of nearly $99.2 billion, which functions as a significant annual transfer of wealth and a source of considerable leverage for Beijing. More critically, the composition of these imports is heavily concentrated in inelastic, upstream inputs that are essential for India’s entire industrial production base.

For many of these critical components like solar cells, lithium-ion battery cells and a vast array of Active Pharmaceutical Ingredients (APIs) and Key Starting Materials (KSMs) official data reveals that India is reliant on Chinese suppliers for more than 50 per cent of its total requirements.

This structural imbalance is further underscored by India’s ballooning semiconductor import bill, which reached Rs 1.71 lakh crore in fiscal year 2023-24.

This figure reflects a deep dependence on upstream components like wafers and integrated circuits, even as the lower-value assembly and packaging segments are being domesticated. India’s manufacturing ambitions are thus structurally constrained by a critical vulnerability at the heart of its supply chain.

Given these distinct vulnerabilities, could India plausibly mitigate the risks by further deepening its integration within the RIC bloc itself? A dispassionate analysis of the empirical evidence suggests this would be a strategically flawed proposition.

Russia’s economy, with a GDP smaller than that of Italy, is simply too small and its domestic product demand profile too misaligned to absorb Indian exports at a scale sufficient to offset potential losses from Western markets.

China, while a massive market, already enjoys a massive surplus, and its policy is geared towards technological self-sufficiency, not absorbing more of India’s low-end exports. Moreover, Beijing already controls the critical upstream chokepoints, meaning any deeper integration would likely reinforce, not alleviate, the existing asymmetry.

Deepening ties with a sanctioned Russia actively invites third-party punishment and coordinated tariff retaliation from a unified bloc of Western nations. An ever-increasing reliance on China, a nation with which India shares a contested and militarised border, exposes the nation to acute upstream supply shocks in everything from semiconductors to crucial chemical intermediates. The RIC framework, therefore, does not create a resilient, integrated economic space.

Instead, it magnifies systemic risk while offering only point-specific benefits, such as discounted energy and legacy defence equipment. What may have once been perceived as savvy strategic hedging is now morphing into a high-stakes economic cul-de-sac.

The only viable antidote to this concentration of risk is a deliberate and comprehensive portfolio approach, one that prioritizes diversified markets, diversified suppliers, and a proactive multilateral engagement strategy.

India’s true and sustainable global comparative advantages lie not in competing at the bottom of the value chain, but in its high-value services sector, sophisticated engineering goods, pharmaceutical formulations and vaccines, and increasingly, in assembly-heavy electronics.

Services exports, which reached an impressive $387.5 billion in fiscal year 2024-25, dominated by IT and software services, are India’s geoeconomic trump card, demonstrating a sustainable and world-class competitive strength.

A coherent national strategy must therefore target three parallel fronts. The first is aggressive domestic capacity-building. This means using instruments like the Production-Linked Incentive (PLI) schemes to de-risk investment and incentivize the domestic production of critical APIs, lithium-ion cells, and semiconductor packaging.

The second front is a campaign of strategic trade agreements. Pursuing accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is no longer a choice but a necessity. Modelling suggests it could deliver high-value market access and lock India into a high-standard trade architecture that exists beyond the immediate US-China vortex.

The third front involves leveraging multilateral and strategic frameworks. Proactive engagement with the Indo-Pacific Economic Framework (IPEF) and the Quad facilitates vital coordination on supply-chain resilience, critical minerals, technology standards, and trusted investment corridors, providing significant leverage without demanding overreliance on any single partner.

Such a multi-vector diversification strategy is the only way to convert tactical arbitrage into enduring strategic autonomy, allowing India to exploit its inherent strengths while systematically mitigating the concentrated risks emanating from its engagements with both Russia and China.

Mohan is Professor of Economics and Dean, IDEAS, Office of InterDisciplinary Studies, Director, Centre for New Economics Studies, Jindal School of Liberal Arts and Humanities. Lazarus is a Foreign Policy student at OP Jindal Global University. Ankur Singh contributed to this article