The geopolitical balancing act

India is benefitting from maintaining its historic unaligned stance in tensions between the US and Russia. Since the start of the war in Ukraine, India has been ramping up oil imports from Russia to take advantage of discounted prices. And Indian delegates have this week been discussing a free-trade agreement with their Russian counterparts. But in the major geopolitical divide of the next decade – between the US and China – we think India will come off the fence and align with the US. For a start, India has a shared security interest with the US in limiting the power and influence of China – particularly given that it has a contested land border with China and is worried about Chinese military presence in the Indian Ocean. And from an economic perspective, India is well-positioned to benefit further from the “friend-shoring” of manufacturing supply chains if it shift towards the US. Apple’s decision late last year to relocate more of its manufacturing into India (and out of China) is beginning to bear fruit: iPhone production in India trebled in the 12 months to March from the previous year (albeit that India still only accounts for 7% of total iPhone production), and the high-profile meeting between Apple CEO Tim Cook and Prime Minister Modi this week raises hopes of a further strengthening of ties.