War profoundly reshapes a nation’s strategic position, especially a protracted war of attrition. Before the Russia-Ukraine conflict reaches a decisive outcome, Russia’s strategic standing has declined, because it needs China, India, and even North Korea to extend a helping hand, thereby giving the aiding parties greater bargaining power.

This time I will analyze the shift in Russia-India relations, and touch on India’s large-scale investment solicitation in Japan along the way.

Regarding this year’s BRICS summit, the West is primarily watching three things: whether India, as this year’s host, can steer the expanded BRICS toward downplaying its anti-Western character; the pace and direction of “de-dollarization”; and the extent to which BRICS can influence the Middle East war.

In the first two observation windows, the West sees the same “reassuring” picture—China and Russia on one side, India on the opposite side.

The third window also reassures the West: the May foreign ministers’ meeting saw divergent positions on Middle East issues, unable to resolve sensitive geopolitical matters and only able to handle affairs that “offend no one,” such as India’s flagship “Digital Public Infrastructure” (DPI) initiative. And what kind of organization BRICS actually is remains an open question.

Personally, I believe the most noteworthy development is the shift in the China-Russia-India triangle. This article examines the situation from Russia’s perspective, filling in the strategic picture.

Russia’s Hands Full of Rupees

Under Western sanctions, Russia relies heavily on energy exports to China and India to sustain the Russia-Ukraine war. The problem of being unable to use dollars is easily solved on the China-Russia trade front—settlement in rubles/RMB suffices. The RMB is more widely used internationally than the ruble, and since bilateral trade imports and exports are roughly balanced, China does not fear “having its hands full of rubles” that it cannot dispose of.

By contrast, when Russia trades in local currency for large energy exports to India, the ruble/rupee settlement runs into serious problems, because Russia-India imports and exports are severely imbalanced. In fiscal year 2023/24, Russia’s exports to India amounted to $61.43 billion in equivalent goods, while India’s exports to Russia were only about $4.3 billion.

This massive trade gap leaves Russia “with hands full of rupees,” with no idea where to spend them, unable to take them to the market to exchange for dollars, and only able to leave them in India’s financial system. New Delhi hopes these rupees can be used to buy Indian goods, invest in Indian infrastructure and enterprises, and purchase Indian bonds—but the goods Russia needs are far beyond India’s capacity to supply, and financial products and bonds are “not attractive enough,” failing to solve Russia’s “rupee trap.” This led Russian Foreign Minister Lavrov to publicly admit that Russia was “sitting on billions of rupees it cannot spend.”

This pit is called “earn in India, spend in India—don’t even think about taking a single cent home.”

The key point is that India does not want to pay Russia’s energy bills in RMB, as that would “benefit China.” Moscow cannot force the issue either, and can only ask India to expand exports to Russia to balance bilateral trade and resolve Russia’s “excess rupee” problem.

However, New Delhi’s presentable goods are extremely limited—especially the most reliable and sustainable manufactured physical goods, which New Delhi simply lacks the capacity to supply Moscow. Just when the Russian side was reaching its breaking point, an opportunity emerged.

Ukraine successfully used drones and other weapons to attack refineries and energy infrastructure inside Russia, causing a shortage of refined petroleum product capacity on the Russian side, which turned back to India to buy its own exported oil (after processing). Naturally, Russia paid in rupees, and this transaction briefly balanced Russia-India bilateral trade—a stroke of luck in unfortunate circumstances.

But Russia cannot allow its domestic capacity shortage to persist indefinitely; it must work to restore production. Hence this is described as a brief trade balance that cannot resolve the fundamental problems of “poor rupee liquidity” and Russia’s continued dependence on Indian oil purchases before the war ends, perpetuating the trade imbalance.

This has caused a qualitative shift in Russia-India relations. In the past, Russia and India were “back-to-back mutual supporters”; now they are “face-to-face settling accounts.” The era when India needed Russia has ended; now it is Russia that needs India—meaning the bargaining power has shifted hands, New Delhi holds more chips, and has grown bolder.

Putin visited India in early December 2025, his first trip to India since the Russia-Ukraine war broke out. The two sides signed 29 cooperation documents covering shipbuilding, shipping, civilian nuclear energy, critical minerals, and other areas to celebrate 25 years of strategic partnership, and issued the “Strategic Directions for Russia-India Economic Cooperation Development Plan (to 2030),” aiming to push bilateral trade to $100 billion by 2030.

A month after Putin and Modi shook hands and made merry, the United States sanctioned Russia’s two major oil companies. Indian refineries, to avoid secondary sanctions, sharply reduced purchases—meaning that the nearly 80-year friendship between India and Russia, and 25 years of strategic partnership (upgraded in 2010 to a “Special and Privileged Strategic Partnership”), could not withstand the test under American pressure.

Washington and New Delhi reached a U.S.-India trade agreement in February 2026. The U.S. side claimed India committed to ceasing direct or indirect imports of Russian oil and instead expanding purchases of American goods, with the U.S. correspondingly revoking and reducing punitive tariffs. But the Indian side did not enthusiastically echo this account, choosing instead to remain vague. Nevertheless, during U.S.-India negotiations, India did substantially reduce Russian oil purchases.

Subsequently, the U.S.-Israel-Iran war broke out, and Middle East crude premiums soared. Indian refineries quickly turned back to buying Russian oil, breaking historical records in June and July, until Russian oil facilities were attacked by Ukraine and Moscow in turn bought back at prices higher than the original selling price. At this point, India was arbitraging both ways—simply winning big.

In the eyes of both the U.S. and Russia, New Delhi’s “long live fence-sitting” is “criminal proceeds” obtained by reneging on bilateral agreements or tacit understandings. The U.S. response was a bill introduced in Congress in August proposing high tariffs (up to 100%) on countries that continue to buy large quantities of Russian oil, exposing Indian refineries to secondary sanctions and international financial risks. Russia, needing to sustain the war, adopted roundabout tactics—focusing its attacks on the United States while offering India inducements: bigger discounts, flexible settlement, and “making big rupee profits” as its response to New Delhi’s fickleness.

In fact, Moscow’s options are limited and it can only grit its teeth and tolerate India’s strategic pro-American tilt. That is why I say Russia-India relations are now “face-to-face settling accounts.” It cannot be said the relationship has worsened, but because of the shift in strategic positions, both sides calculate interests more precisely and reserve less sentiment.

From Russia’s perspective, if the Middle East conflict becomes protracted, continuously disrupting Middle East oil exports, and the U.S. sanctions countries importing Russian oil, this would mean a substantial weakening of India’s bargaining power. Because if India cannot withstand U.S. pressure, it can only buy expensive oil from the U.S. and Venezuela, causing India’s trade deficit to deteriorate sharply and the rupee to face depreciation pressure. Russia, “with hands full of rupees,” would then have no choice but to completely refuse rupee settlement.

In other words, the scenario most favorable to Putin is: the Russia-Ukraine war cooling down and the U.S.-Israel-Iran war becoming protracted—but for Modi, the opposite is true.

Thus, the recent U.S. re-mediation of Russia-Ukraine, and Moscow’s expression of welcome, is not hard to understand. This may mean a breathing space on the Russia-Ukraine battlefield before the “winter offensive,” but this breathing space is relatively unfavorable for India.

Undoubtedly, this is a severe test for the fence-sitting diplomatic line. It is not hard to imagine New Delhi’s anxiety after the “double-win carnival” suddenly feeling “double-loss looming.” Viewing the “warming” of China-India relations from this perspective, one can see that India wants to avoid sliding into a “triple loss.”

China’s Belly Full of Capacity

India urgently needs to bring in China’s manufacturing supply chain to strengthen its capacity to export physical goods, mainly targeting Western markets, especially the European market. On the other hand, this would also help alleviate the bilateral trade imbalance caused by Russia’s “hands full of rupees.”

The logic is that to balance Russia-India bilateral trade, expanding the output of manufactured physical goods is most effective—and this takes time. Although India’s options are not limited to China’s supply chain, considering the completeness of the supply chain and the efficiency of infrastructure construction, if it wants to achieve exports as soon as possible, China is naturally the first choice.

However, with China-Russia bilateral trade expanding rapidly, why should China let India get a share? This is from China’s perspective. But from Russia’s perspective, theoretically, if it could reduce dependence on China while alleviating the “rupee trap,” that would serve Moscow’s interests.

In other words, India easing relations with China would not only prevent it from being squeezed simultaneously by the U.S., Russia, and China—leading to a “triple loss”—but also open a door conducive to maintaining India’s strategic position. If successful, New Delhi’s fence-sitting would be elevated to a new level.

For China, its greatest weakness is precisely its greatest strength—unmatched manufacturing competitiveness. And in the predicament of weak domestic demand forcing reliance on exports, China’s exports have surged, easily triggering protectionist sentiment in importing countries. In the past two years, such cases have multiplied, forcing us to consider encouraging enterprises to invest overseas to ease importing countries’ resistance.

But China has many options for encouraging enterprises to go global—why India? And considering the China-Russia-India trilateral strategy, we have no reason or motivation to solve Russia’s “hands full of rupees” problem. Unless India actively responds to the “de-dollarization, support the RMB” process within BRICS to please China and Russia—but this would likely destroy India’s proud fence-sitting line, even amounting to openly following China, which cannot happen.

In fact, all BRICS members know full well that the shortcut to “de-dollarization” is “supporting the RMB,” but constrained by their own relations with the West, they are reluctant to take such strong medicine. This multi-country hesitation is India’s leverage to slow RMB internationalization. Therefore, BRICS’s solution is not to replace the dollar but to provide an additional escape hatch, making BRICS more like an organization plugged into the Western system rather than a fully independent multinational bloc.

As for Russia, although it shares China’s willingness for “de-dollarization,” it also wants to hedge and expand its non-Western circle of friends to avoid over-dependence on China. This is entirely reasonable and nothing to criticize—after all, China also has its own strategic interests to consider.

So theory is theory, but reality does not allow theory to be realized. China’s belly full of capacity can hardly find release in the China-Russia-India relationship. Some might argue that given India’s vast market, China should try once again to cooperate with India, simply building guardrails to keep damage controllable.

I do not want to arbitrarily dismiss this idea, but I suggest our side give itself a period of observation from the sidelines, to see how other countries assess the situation, as a basis for deliberation.

China is not in a hurry; India is. The Modi government knows well that getting China to invest heavily in manufacturing is no easy task, so it smoothly turned to Japan—a ready-made bellwether.

India’s Mouth Full of Promises

In August, India’s Commerce and Industry Minister led a delegation of over 200 people to Tokyo, Nagoya, and Osaka to solicit investment. This is not ordinary FDI attraction but explicitly targets “export-oriented manufacturing investment” and “supply chain restructuring investment,” attempting to turn India into Japanese companies’ next manufacturing base.

Industries include: semiconductors, electronics, automobiles and components, precision machinery, specialty chemicals, pharmaceuticals/medical devices, steel, clean energy, shipbuilding, AI and data centers.

What India wants: technology, equipment, supply chains, quality control, export markets.

India touted a ten-year investment target of 10 trillion yen (approximately $64 billion). The “10 trillion” refers to the 3.5 trillion investment target announced in 2014 being met, then raised to 5 trillion; after the 2022–2026 investment target of 5 trillion is met, it will be raised again to 10 trillion. Moreover, this amount is not purely private investment but includes JICA loans, JBIC financing, and government funds.

Commerce and Industry Minister Goyal declared.

1. India is the best holy land where data “will never be stolen.”

2. Claimed the 10 trillion yen investment target will be completed “six years ahead of schedule.”

3. Demanded Japanese companies “double” their current business scale in India.

4. Praised its free trade agreement (FTA) network as a “global duty-free springboard.”

However, Japanese companies have been burned by India before—Daiichi Sankyo pharmaceutical, Nissan Motor, the Mumbai-Ahmedabad high-speed rail project, the DMIC Delhi-Mumbai Industrial Corridor. These cases involved either “subsidy reneging,” temporary standard changes, or being dragged into time-consuming judicial hell—so this time Japanese companies are not buying Goyal’s loose talk.

Japanese companies question India’s low transparency in legal enforcement and high risk of surprise audits of multinational corporations, contradicting “data will never be stolen”: most investments remain at the “letter of intent” stage, and the number of Japanese companies actually operating in India has stagnated since 2018, far behind Thailand and Singapore, contradicting “investment target met six years ahead of schedule”; different state regulations, extremely complex tax systems, cumbersome administrative procedures, and frequent severe delays in land and environmental approvals contradict Goyal’s claimed “perfect business and manufacturing environment.”

Objectively speaking, the number of cases where Japanese companies were fined in India is noticeably lower than for Korean, German, Chinese, and American companies. So if India wants to find an advanced manufacturing country with remaining credit space to draw on, it is Japan.

Why are Japanese companies fined relatively less? Mainly because India’s “minefield” is taxation and customs is a slaughterhouse, targeting industries concentrated in electronics (28%), textiles (22%), chemicals (18%), and machinery (15%), while Japanese companies’ main investment is in automobiles, and they tend to form joint ventures with local partners, making localization less likely to attract trouble.

The problem is that India now wants manufacturing with export capability. The industries targeted for Japanese investment include electronics, chemicals, and machinery—seen as targets—as well as strategically sensitive semiconductor materials, critical minerals, AI, and defense. This makes it hard to avoid the “customs slaughterhouse,” and the odds of being cut increase greatly.

American company Apple is facing a $38 billion astronomical fine—Japanese companies will not have missed this. That is about 6 trillion yen, exceeding Japan’s total investment in India since 2014. The preferential treatment India promises today, India will bite off a chunk of your flesh tomorrow. I just want to see whether Japanese businesses will fall into this pit this time.

Conclusion

The respective positions of China, Russia, and India within BRICS roughly correspond to the geometry of the China-Russia-India triangle: China and Russia back-to-back, India on the opposite side, but face-to-face with Russia.

For China, BRICS is an important grouping representing Global South countries. However, a cross-national, even cross-continental organization without a leader has very limited effectiveness—just bridging internal rifts and reducing internal friction is exhausting enough, and achieving consensus-based decision-making, given current developments, is likely to be extremely difficult.

To solve this problem, China, Russia, and India must build greater consensus. I suspect this is the main reason China is willing to ease relations with India. And this is a rather tortuous path.

Inclusiveness displays grand vision, but the price is torment.

Editor: Zhao Yiwen